EUROPEAN FX UPDATE: tables turn, but ranges remain tight as US CPI looms

Analysis details (10:21)

DXY

It goes without saying that the Dollar and index are looking towards US inflation data for fresh fundamental direction amidst a wide range of forecasts around consensus and the market net short or at least oversold in terms of IMM spec positioning. Moreover, the DXY lost another technical prop on Monday and was left relying on sentimental support/underlying bids to hold around the psychological 103.000 level within relatively narrow 102.900-103.260 confines.

JPY/NZD

Hardly all change, but the Yen and Kiwi switched positions, and not for entirely logical reasons as Japanese Q4 GDP fell short of expectations, while NZ inflation forecasts for Q1 were mixed. However, Usd/Jpy retreated further from yesterday’s peak near 133.00 to probe 132.00 on confirmation that Ueda has been chosen as next BoJ Governor and Nzd/Usd lost momentum above 0.6350 again as the nation declared a state of emergency for only the third time ever, due to the damage caused by Cyclone Gabrielle.

GBP/EUR/CHF  

Sterling’s advances were more understandable given broadly better than anticipated UK jobs and wages data, with the only exception being softer than consensus headline average earnings. Cable secured a firmer grasp of the 1.2100 handle in response before probing 1.2200 and testing a Fib just 5 pips beyond, and Eur/Gbp was capped ahead of 0.8850 following media reports that a new customs deal with the EU could be announced in the next one or two weeks to resolve the dispute over post-Brexit trading rules in Northern Ireland. Nevertheless, the Euro also made gains at the Buck’s expense to breach 1.0750 and the Franc eyed 0.9950 having held just above 0.9200 in wake of firmer than prior Swiss producer and import prices.

AUD/CAD

Both narrowly mixed and barely changed against the Greenback as the Aussie hovered above 0.6950 weighing up a deterioration in Westpac consumer sentiment vs improvements in NAB business confidence and conditions, while the Loonie stayed afloat between 1.3353-28 parameters even though crude prices slipped on supply dynamics (US planning to sell 26 mn brls from the SPR).

SCANDI/EM

The Nok recoiled with Brent rather than gleaning traction from a less negative Q1 Norwegian consumer confidence print, while the high-flying Huf was rattled by a hefty Q4 Hungarian GDP miss, but the Pln took a much deeper than feared Polish contraction largely in stride and the Cnh/Cny derived some impetus from more talk about Chinese Foreign Minister Wang Yi and US Secretary of State Blinken reconvening a meeting at a security conference later this week. Elsewhere, some respite for the Try as Turkey prepared to reopen its bourse on Wednesday as sources suggested that the country’s wealth fund will support stocks via a new internal mechanism, but little solace for the Inr from the latest above forecast Indian inflation data as wholesale prices followed in the footsteps of consumer prices.

14 Feb 2023 - 10:20- ForexData- Source: Newsquawk