EUROPEAN FX UPDATE: Yen fills export bids and Greenback gains hedge fund favour

Analysis details (10:03)

DXY/JPY

The Dollar drifted within a 101.840-520 range having marginally extended on Friday’s gains when hawkish comments from Fed’s Waller, ip data and a relatively strong preliminary UoM survey outweighed mostly weaker than forecast retail sales, while the Yen lagged as new BoJ Governor Ueda reiterated no change in ultra-easy policy for the time being and the Bank offered to buy an unlimited amount of 5-10 year JGBs at a fixed rate yet again. However, Usd/Jpy was capped around 134.21 amidst layered Japanese export supply that offset a shift in positioning by hedge funds on the view that the Buck’s losing streak may come to an end, according to the latest CFTC weekly data. In fact, leveraged funds turned net Usd long vs all major currencies for the first time since January 2022. Next up for the Greenback and others by default, NY Fed manufacturing and NAHB housing indices before Fed’s Barkin.

CHF/GBP/EUR/CAD

All rangy against their US counterpart, with the Franc probing 0.8950 between 0.8959-23 in wake of comments from SNB Chairman Jordan reminding that the Bank cannot exclude it may need to hike again rather than another hefty jump in Swiss sight deposits as liquidity from the CS collapse continues to get recycled. Meanwhile, the Pound pivoted 1.2400 pre-BoE’s Cunliffe and a run of prime UK releases kicking off from Tuesday with jobs and earnings, the Euro hovered under 1.1000 where more decent option expiry interest resided, weighing up somewhat mixed ECB rhetoric (Kazaks seeing 25-50 bp hike in May vs 0-25 bp pre Centeno) ahead of President Lagarde and following a slight downward revision to final Italian inflation metrics, and the Loonie straddled 1.3350 in advance of Canadian wholesale trade and after another reiteration of conditional pause guidance from BoC Governor Macklem.

AUD/NZD  

The Aussie also faced hefty option expiries and psychological resistance vs its US rival, as 2.6 bn ran off at 0.6700, but just managed maintained 1.0800+ status against the Kiwi on the eve of RBA minutes, while Nzd/Usd failed to derive much impetus either side of 0.6200 via slowdowns in NZ food prices or the performance of services index.

SCANDI/EM  

No real (adverse) reaction to bleaker Swedish Finance Ministry expectations for 2023 from the Sek, but the Nok was undermined by a downturn in Brent and a narrower Norwegian trade surplus and the Cnh/Cny flat-lined after the PBoC injected liquidity in 1 year and 7-day ops, former at an unchanged MLF rate and Governor Yi cited historical evidence against the success of currency intervention against the backdrop of further China-US angst. Elsewhere, the Sgd was boosted by significantly stronger than anticipated Singapore non-oil m/m exports.

17 Apr 2023 - 10:03- Fixed IncomeEconomic Commentary- Source: Newsquawk