EUROPEAN FX UPDATE: Yen implodes as negative impulses intensify

Analysis details (10:20)

JPY/DXY/EUR

The Yen was already teetering against the backdrop of soaring global bond yields and the fiscal implications of sky high commodity prices, but the ECB’s latest hawkish policy pivot may have been the last straw from a Central Bank divergence standpoint as it leaves the BoJ standing alongside just Sweden’s Riksbank and Switzerland’s National Bank as outright doves in the G10 community. Consequently, Eur/Jpy is back above 128.00 and Usd/Jpy is probing 117.00 after breaching its prior y-t-d twin peaks, while the Dollar index is bouncing further from sub-98.000 lows as a result and with additional impetus from the Euro unwinding more of its initial post-ECB gains. The DXY is now inching towards 99.000 again within a 99.816-337 range as Eur/Usd flounders below 1.1000 amidst commentary from GC members underlying no rush to tighten rates as the next phase of normalisation, and measured moves when hikes are deemed appropriate - see Headline Feed at 7.20GMT, 8.00/8.01GMT and 9.46GMT  for remarks from Villeroy, Rehn and Kazimir respectively.

AUD/NZD/CHF

All unable to resist renewed Greenback strength even though risk sentiment has picked up again after a downturn in the US on Thursday spilled over to the APAC region overnight and should be relatively supportive for the Aussie and Kiwi. However, Aud/Usd has retreated through 0.7350 and Nzd/Usd is back under 0.6850, irrespective of a rise in NZ’s manufacturing PMI. Elsewhere, the Franc is still trying to contain losses on rotation around 0.9300, though appears to have relinquished its winning streak against the Euro with Eur/Chf on the 1.0200 handle following its recent drop below parity.

CAD/GBP

Relative outperformers or at least displaying more fight vs their US counterpart as the Loonie holds above 1.2800 in the run up to Canadian labour data and Sterling finds support circa 1.3050 in wake of forecast-beating UK GDP, ip and output metrics. Note, the trade deficit was much wider than expected, but mitigated by a change in ONS methodology that understated exports to the EU markedly.

SCANDI/EM

The Sek and Nok are nestling within w-t-d ranges, albeit divergent vs the Eur, but the Try looks vulnerable on the verge of 15.0000 against the Usd following weaker than expected Turkish ip and the latest CBRT survey showing yet another rise in end of year CPI projections, softer growth and a weaker Lira. Elsewhere, the Cnh and Cny are lower amidst more China-US tech sector angst and after the PBoC set a weaker midpoint fix for the onshore Yuan, but the Rub ia paring more losses as reports suggest that a meet between Russian and Ukrainian Presidents may yet be on the cards in the not too distant future.

11 Mar 2022 - 10:19- Fixed IncomeData- Source: newsquawk