EUROPEAN FX UPDATE: USD remains King in the FX space

DXY: +0.4%, 105.84

• Firmer vs. all peers as the post-election rally continues and focuses markets on the prospect of looser fiscal policy vs. a subsequently potentially tighter approach from the Fed. Today's session sees the release of US NFIB and NY Fed SCE and speaker slate which include Fed's Waller, Barkin Kashkari and Harker. At this stage, FOMC members will likely refrain from offering any explicit signals over what to expect from the Fed in response to the Trump Presidency.


• DXY has been as high as 105.87 with all eyes on a test of the 106 mark; not breached since 2nd July (106.05 was the high that day).

EUR: -0.3%, 1.0622

• Softer vs. the broadly stronger USD with the pair's bruising post-election sell-off continuing to pick-up pace. From a macro perspective in the Eurozone, today has seen commentary from ECB's Rehn and Holzmann with the former flagging downside risks to growth and the latter cautioning over the impact of Trump tariffs on inflation. German ZEW fell short of expectations.


• EUR/USD has delved as low as 1.0618 with the pair 3 handles below where it was pre-election. The next obvious target for the pair comes via the 2024 low @ 1.0601, which will then open up a potential test of the 1.05 mark (ING yr-end target).


• Notable EUR/USD opex activity: 1.0600 (1.8bln), 1.0625 (1.1bln), 1.0665-75 (818mln), 1.0725 (2.3bln), 1.0740-50 (3.3bln)

JPY: +0.2%; 154.07

• Fresh macro drivers for Japan have been on the quiet side today. However, the bigger picture for the JPY remains one of a cautious approach to rate hikes from the BoJ vs. expectations that the Fed may need a shallower rate cutting cycle than previously assumed due to the inflationary effects of a Trump Presidency.


• USD/JPY has made its way onto a 154 handle, topping out @ 154.16 vs. yesterday's opening levels of 152.61. The next upside target for the pair comes via the post-election peak @ 154.71. If breached, 155 will be the big level to watch and one that could prompt speculation over Japanese intervention.

GBP: -0.4%, 1.2817

• GBP near the foot of the leaderboard in the wake of UK jobs metrics. The usual data quality caveats apply, however, the main takeaway was a larger-than-expected jump in the unemployment rate to 4.3% from 4.0% and a slowdown in the rate of employment. Wage components came in hotter-than-expected. However, this appears to be more a by-product of unfavourable base effects.


• Comments from BoE's Pill this morning adopted a cautious stance towards further policy loosening - cites more work to be done on inflation and high levels of wage data,


• Accordingly, after tripping through its 200DMA to the downside @ 1.2817, Cable slipped onto a 1.27 handle for the first time since 15th August. Cable managed to make its way back onto a 1.28 handle after basing out @ 1.2793.

AUD and NZD: AUD/USD -0.5%; 0.6545. NZD/USD -0.3%; 0.5950

• Antipodeans are both softer vs. the USD with risk sentiment in Europe very much on the backfoot and a poor showing for China overnight.


• AUD/USD has extended on yesterday's downside and slipped further onto a 0.65 handle but is for now holding above last week's multi-month post-election low @ 0.6511.


• Losses for NZD/USD have resumed despite a more steady showing yesterday. As such, NZD/USD has slipped below yesterday and Friday's lows @ 0.5951 and 0.5947 respectively. The next targets come via the 7th November low @ 0.5931 and the multi-month low from 6th November @ 0.5912.

12 Nov 2024 - 10:20- ForexData- Source: Newsquawk