EUROPEAN FX UPDATE: Yen and Lira suffer midweek mauling (thus far)

Analysis details (10:26)

JPY/TRY

It remains to be seen whether fortunes take a turn for the better at some stage, but for now the omens look bleak for the Yen and Lira as they plumb new depths against the Dollar and other currencies. Indeed, Usd/Jpy only retreated briefly though 133.00 in response to comments from BoJ Governor Kuroda that sounded a little more concerned about the rapid pace of moves (weakening) seen of late before resuming its upward trajectory when he added that various macroeconomic models show that a weak Yen is positive and Japan’s Economy Minister refused to comment on what might be deemed rapid in terms of movement in the currency. The headline pair subsequently topped 133.85 with little resistance put up by exporter offers that are said to be stacked at every half and full round number all the way up to 135.00 and the 135.20 peak from 2002. Similarly, Usd/Try did not show much regard for the psychological 17.0000 mark and once breached the rally extended to 17.1500 with minimum fuss on a combination of negative Turkish factors.

DXY

A reversion to higher US Treasury yields and curve-steepening, jittery risk sentiment and further depreciation in several Greenback counterparts all contributed to the latest Buck bounce that lifted the index back above 102.500, into a 102.740-390 range.

NZD/AUD

In stark contrast to the above, waning risk appetite and another failure to regain or retain significant upside levels vs their US rival dragged the Kiwi and Aussie back down under, as Nzd/Usd faded ahead of 0.6500 and Aud/Usd shy of 0.7250 again. Note, the latter faces key Fib resistance at 0.7245 (50% retracement of the y-t-d drop from 0.7661 peak to 0.6829 drop) and the 200 DMA, at 0.7255 today, but Aud/Nzd is holding comfortably above 1.1100 in wake of the hawkish RBA hike on Tuesday.

CHF/GBP

Also making way for the latest Dollar rebound, and hardly taking note of specific or independent impulses in the process, with the Franc heading towards 0.9800 and Pound pulling back to sub-1.2550, irrespective of a downtick in Swiss nsa unemployment or a slightly softer than expected the UK construction PMI.

EUR/CAD/SEK/NOK

Relative G10 outperformers, or at least holding up better than others, as the Euro keeps afloat of 1.0650 vs the Greenback in anticipation of hawkish ECB policy guidance tomorrow. Elsewhere, firmer crude benchmarks (WTI over Usd 120/brl and Brent Usd 121+/brl) propped the Loonie and Norwegian Krona around 1.2550 against the Buck and 10.1500 vs the Euro respectively, while the Swedish Crown stayed mostly under 10.5000 against the single currency pre-ECB and replacement for Skingsley at the Riksbank.

EM      

The Cnh and Cny lost more ground vs the Usd, as did the Inr even though the RBI raised rates by half point vs the 40 bp anticipated, while the Huf and Pln traded sideways against the Eur post-stronger than consensus Hungarian inflation data and pre-NBP that is seen tightening by 75 bp, but could do more.

08 Jun 2022 - 10:26- Fixed IncomeEconomic Commentary- Source: Newsquawk