EUROPEAN FX UPDATE: Yen continues comeback to detriment of the Dollar

Analysis details (09:58)

DXY/JPY/CHF/GBP/EUR

The Buck was already backing off from post-payroll recovery highs when anecdotal US inflation data and soft near term CPI expectations exerted more downside pressure, but a deeper retreat in Treasury yields prompted another bout of weakness along with breaches of technical and psychological levels in several major pairings. Specifically, the Yen cleared 141.00 and a Fib just pips below the round number on the way to probing 140.50, the Franc scaled 0.8850, Sterling peered over 1.2900 with the aid of hot UK earnings and the Euro regained 1.1000+ status. Consequently, the Greenback gravitated and the index waned between 101.960-670 parameters awaiting Wednesday’s CPI metrics rather than relatively second tier releases, including NFIB business optimism, IBD/TIPPs and Fed Discount Rate Meeting Minutes later today. Back to the Pound, and gains were faded as the aforementioned stronger than expected wages came with less bullish labour market indicators like a decline in HMRC employment, a rise in the ILO jobless rate and rebound in claimant count.

CAD/AUD/NZD 

Firm crude prices kept the Loonie afloat on the eve of the BoC, as Usd/Cad sat within a 1.3281-46 range, while the Aussie gleaned some traction from improvements in consumer sentiment, NAB business conditions and confidence to bounce off Monday’s sub-0.6650 base and retest offers into 0.6700. However, the Kiwi lost momentum above 0.6200 and 1.0750 against its US and Antipodean peers in cautious trade ahead of the RBNZ on Wednesday when guidance could confirm that the OCR peak has been reached.

SCANDI/EM 

The fact that Eur/Sek reversed through 11.8000 and Eur/Nok held just above 11.5000 irrespective of Brent maintaining a bid suggested that chart impulses were more influential and favoured the Swedish Crown, though Turkey withdrew its opposition to Sweden’s NATO membership and could have been a positive factor as well. Meanwhile, the Cny and Cnh took advantage of the generally soft Usd and PBoC’s supportive midpoint fix to the extent that the former flirted with resistance at the 21 DMA (7.2002), and the Try took a wider than forecast Turkish current account deficit largely in stride.

11 Jul 2023 - 09:58- Fixed IncomeData- Source: Newsquawk