EUROPEAN FX UPDATE: USD outmuscles peers, AUD lags post-RBA

USD: DXY +0.2%; 106.35

• DXY up for a third consecutive session and has been growing in strength throughout trade. From a macro perspective, markets are currently in waiting mode ahead of tomorrow's CPI report which is expected to see a +0.3% M/M outturn for core CPI. As it stands, odds of a 25bps Fed cut sit @ 85%. DXY has gained a firmer footing on a 106 handle with a current session high @ 106.39 with the 21DMA just above @ 106.40 and the 4th December high @ 106.72.

EUR: EUR/USD -0.2%; 1.0526

• EUR a touch softer vs. the USD with not a great deal in the way of fresh macro drivers for the Eurozone. Focus for the Eurozone this week is on events in Frankfurt with the ECB set to pull the trigger on a 25bps cut. Markets had been speculating on a larger 50bps move but this looks unlikely with members of the GC failing to publicly endorse such a move. EUR/USD has slipped below yesterday's 1.0532 low with focus on a potential test of 1.05; not breached since 4th December.


• EUR/USD opex: 1.0465-75 (2.6bln), 1.0500 (1.4bln), 1.0505-15 (882mln), 1.0525-30 (1.1bln), 1.0550 (650mln), 1.0600 (2.3bln), 1.0620-30 (1bln).

JPY: USD/JPY +0.2%; 151.48

• JPY extending on yesterday's losses vs. the USD with USD/JPY advancing further on a 151 handle. Fresh JPY drivers remain light in the run-up to the BoJ's December meeting with odds of a 25bps hike now at 28% vs. 42% seen at the start of last week. The next upside targets come via the 28th November high @ 151.95, the 200DMA @ 151.98 and the 152 mark; not breached since 27th November.


• USD/JPY opex: 150.00 (450mln), 151.00 (320mln), 151.50 (250mln), 151.90-152.00 (1.1bln).

GBP: GBP/USD -0.1%; 1.2744

• GBP trivially softer vs. the USD as UK macro drivers remain light. As mentioned in our commentary yesterday, monthly GDP on Thursday is the only notable data highlight for the UK, albeit it is unlikely to prove to be a gamechanger for the BoE with the MPC instead prioritising services inflation and real wage growth. For now, Cable is tucked within yesterday's 1.2717-1.2799 range. In the crosses, technicians also highlight EUR/GBP's move back below 0.8270 after basing out @ 0.8260 on November 11th.

Antipodeans: AUD/USD -0.7%; 0.6393. NZD/USD -0.7%; 0.5821

• AUD is the laggard across the majors post-RBA. The central bank maintained its Cash Rate at 4.35% as widely expected, but struck a dovish tone as it expressed confidence that inflation is moving sustainably towards the target. AUD also giving back some gains from yesterday's China optimism. Accordingly, AUD/USD slipped back onto a 0.63 handle with a session low @ 0.6381 vs. last Friday's multi-week low @ 0.6372. NZD/USD is lower but holding above yesterday's 0.5804 trough.

10 Dec 2024 - 09:55- ForexData- Source: Newsquawk