EUROPEAN FX UPDATE: several major deviations on mixed macro impulses

Analysis details (09:53)

SEK/EUR/DXY/JPY/NZD 

The Swedish Crown got a big boost from yet another set of forecast topping inflation metrics, hot on the heels of Riksbank testimony underlining concerns over the need to get CPI back to target, including Governor Thedeen and Board member Bunge. Eur/Sek probed 11.1600 in response from around 11.2440 at one stage on the premise that the Bank is more likely to deliver a more aggressive 50 bp hike rather than the 25 bp option outlined as alternatives for the next policy meeting in April. Moreover, the cross maintained downside momentum even though the Euro was underpinned on the eve of the ECB by source reports suggesting it is still leaning towards delivering the half point rate rises firmly flagged for this month as new projections will show inflation remaining significantly above target for the rest of 2023 and slightly over in 2025. Eur/Usd popped to circa 1.0759 in response and kept the Dollar index capped for a while within a 103.440-104.120 range, as the largest component of the basket, and awaiting a raft of US releases comprising PPI, Retail Sales and the Empire State Survey. Conversely, the Yen helped to keep the DXY afloat as Usd/Jpy rebounded further from recent lows to top 135.00 on yield dynamics in the form of UST-JGB spread divergence, and with little reaction to relatively stale BoJ minutes from January, or comments from Governor Kuroda. To recap, the latter said the Bank must maintain current monetary easing, but there will also likely be scope to consider steps to address the side-effects of its accommodative policy. Elsewhere, the Kiwi flagged on the 0.6200 handle in wake of a much wider than expected Q4 NZ current account deficit ahead of GDP.

GBP/CAD/CHFAUD   

Choppy and somewhat contrasting fortunes for the Pound pre-UK Spring Budget as it straddled 1.2150 against its US peer, but hovered beneath 0.8800 vs the Euro, while the Loonie contained declines through 1.3700 relative to its US counterpart with mild support via comparative stability in crude prices, the Franc slipped between 0.9124-75 parameters and the Aussie recoiled as broad sentiment soured to 0.6659 from 0.6711 at best.

NOK/EM

The Nok was also knocked back as risk deteriorated markedly and rapidly, having largely shrugged aside a narrower Norwegian trade surplus, and EM currencies followed suit with the Cnh and Cny both testing 6.9000 against the Usd again irrespective of Chinese ip missing consensus marginally, retail sales coming in bang in line and/or urban investment exceeding forecasts.

15 Mar 2023 - 09:53- Fixed IncomeData- Source: Newsquawk