EUROPEAN FX UPDATE: Ton up for the Buck in index terms, at last

Analysis details (10:27)

DXY

Having threatened to score a century several times, but missing the milestone by marginally narrower margins on each occasion, the Dollar index finally made it after further bear-steepening along the US Treasury curve and a partial recovery/consolidation in EU debt that undermined rivals on relative yield grounds. Moreover, another swathe of hedges from Japanese exporters were filled to force the Yen back below 124.00 and activity currencies continued to retreat from recent peaks. However, the DXY could not breach 100.000 and momentum faded fairly quickly to nudge the Greenback off highs across the board.

GBP/EUR/JPY  

As noted above, the Pound, Euro and Yen all backed off to make room for the Buck’s latest advances, but Cable held above 1.3000, Eur/Usd around 1.0850 and Usd/Jpy did not revisit best levels reached overnight to take the edge off the index. However, the technical and fundamental backdrop remains bearish for all three basket components as the Fed gets set to raise rates at a faster pace and start running off its balance sheet in quick order from next month. 

AUD/CHF/NZD  

The Aussie is hovering above 0.7450 and faring a bit better than the Kiwi in wake of the RBA’s FSR that compounded the shift in guidance at Tuesday’s policy meeting with another warning for borrowers to prepare for higher interest rates. Nevertheless, the RBNZ is expected to tighten again this month and although the consensus is for another 25 bp tightening move there are outside calls for half point to underpin Nzd/Usd sub-0.6900 and cap the Aud/Nzd cross ahead of 1.0900. Elsewhere, the Franc is still adjacent to 0.9350 vs its US counterpart and pivoting 1.0150 against the Euro pending the next weekly update on Swiss bank sight deposits to see if the SNB has been intervening again.

CAD/NOK

Some traction for the Loonie and Norwegian Krona as WTI and Brent crude trade off latest lows, while Usd/Cad is also respecting key technical resistance in the form of the 200 DMA, as it sits just under 1.2600 and Eur/Nok straddles 9.5500 in contrast to Eur/Sek nudging 10.3000.

EM

The Zar continues to outperform with some assistance from Gold retaining a firm grip of the Usd 1900/oz handle and approaching its 21 DMA (Usd 1935) irrespective of Usd strength and the ongoing ramp in UST yields, while the Rub is pretty resilient given an unexpected 300 bp CBR rate cut and accompanying comments indicating that a further reversal of its emergency post-Ukraine invasion tightening will be on the agenda at upcoming meetings. Conversely, the Try remains under pressure following the latest CBRT survey showing a higher year end CPI forecast, weaker Lira and growth projections, plus a lower repo rate.

08 Apr 2022 - 10:27- Fixed IncomeData- Source: Newsquawk