EUROPEAN FX UPDATE: Yen gives thumbs up to prospect of Ueda as next BoJ boss

Analysis details (10:22)

JPY/DXY

The Yen got an unexpected surprise and boost via reports in the Nikkei, subsequently backed up by Japanese Government sources, that former BoJ Board member Ueda will be put forward as current Governor Kuroda’s replacement. He was not one of the front-runners and has a history of being more hawkish or less dovish than Amamiya who was among the three top picks, but appears to have firmly rejected the chance of promotion from Deputy Governor. In response, Usd/Jpy reversed through 130.00 and the 21 DMA just below to circa 129.81 before bouncing firmly when the new nominee stuck to his word in terms of promising to take a measured approach towards exiting from ultra-accommodative policy. On the flip-side, the Dollar index lost 103.000+ status in fast market conditions having rebounded further from yesterday’s lows on renewed safe-haven positioning, but pared losses when the Yen retreated towards worst levels around 131.87 and notched a new peak at 103.500.

CAD/NZD/AUD   

Canada’s latest LFS loomed large, but the Loonie derived technical support in the run up to the jobs data as Usd/Cad waned just ahead of a Fib retracement level, at 1.3472 vs 1.3474 and recoiled towards 1.3400 against the backdrop of simmering oil (partly if not mainly on the back of Russia announcing a voluntary 500k bpd output cut from March in retaliation against sanctions, and namely the price cap). Elsewhere, the Kiwi consolidated above 0.6300 vs its US rival and between 1.0953-83 against the Aussie with some impetus from a m/m recovery in NZ electronic card retail sales and the manufacturing PMI returning to marginal growth from contraction, while Aud/Usd was cushioned on the 0.6900 handle following the RBA’s SOMP overnight that underscored guidance for further tightening given upward revisions to inflation forecasts.

CHF/GBP/EUR

All choppy vs the Greenback amidst headlines from Ukraine where Russian missiles are said to have crossed NATO-member nations’ airspace, but relatively contained with the Franc hovering mostly under 0.9200, the Pound keeping tabs on 1.2100 following some supportive UK data (like Q4 GDP, IP and Business Investment over the m/m metric and wider than expected trade gap), and the Euro holding within a 1.0753-1.10693 range.

SCANDI/EM

The Sek extended post-Riksbank gains to almost 11.0600 against the Eur before stalling and waning on risk-off grounds, but the Nok made more headway beyond 11.0000 as much stronger than consensus Norwegian inflation data added fuel to the fire provided by Brent. Conversely, the Cny and Cnh were deflated as Chinese CPI and PPI came in softer than anticipated, while the Mxn and Czk gleaned some traction from Banxico exceeding expectations with a 50 bp hike vs 25 bp widely forecast and hawkish guidance in the CNB minutes (such as the majority agreed that rates should decline later than the baseline scenario, and alternative case with stable rates in Q1-Q3 is useful).

10 Feb 2023 - 10:22- Fixed IncomeData- Source: Newsquawk