EUROPEAN FX UPDATE: Yen loses month end mojo and Aussie derailed by data

Analysis details (10:12)

JPY/DXY/AUD

Another change of direction for the Yen and a sharper pullback from recent highs following reports of Usd/Jpy buying into the Tokyo fix overnight, as Japanese importers placed hedges and compounded a so-called ‘special’ month end buy order that some attributed to an M&A transaction. Moreover, the headline pair was propped by elevated US Treasury yields and further divergence to JGBs after dovish remarks from outgoing BoJ Governor Kuroda and one of the new Deputies, while the bulk of Yen repatriation flows may have been completed amidst speculation that demand for the final day of March, Q1 and the fiscal year might not be as strong this time around. However, Usd/Jpy probed 132.00 from a 130.77 low, but stalled around 132.10 where stops could have lurked according to IFR, and technical resistance also sat beyond the round number in the guise of the 55 DMA, at 132.40. Meanwhile, the Dollar index faced its own chart hurdle at Tuesday’s peak (102.760) having bounced off a marginally firmer 102.410 base, to 102.750. Elsewhere, the Aussie was undermined by softer than expected CPI that underpinned prospects of an RBA pause next week, with Aud/Usd retreating from 0.6713 to 0.6665 or so.

NZD/GBP

The Kiwi benefited at the expense of the Aussie via a reversal in the Aud/Nzd cross through 1.0700, but failed to sustain momentum against the Greenback above 0.6250 in advance of NZ building consents, and Sterling also faded vs the Buck, with Cable topping out ahead of 1.2350 again, irrespective of stronger than forecast BoE mortgage approvals and consumer credit outweighing weaker than consensus mortgage lending.

EUR/CAD/CHF

Ongoing declines in EGBs and ECB’s Lane adding his weight to the need for further tightening underpinned the Euro vs its US peer on the 1.0800 handle, while the Loonie extended its recovery in wake of Canada’s latest budget update even though deficit projections were lifted from estimates made in November, as oil remained supportive. Hence, Usd/Cad managed to hold around 1.3600 and Usd/Chf straddled 0.9200, as the Franc welcomed a former UBS CEO back into the fold and shrugged of a slump in Swiss investor morale along the way.

SCANDI/EM

No solace for the Sek from improvements in Swedish sentiment indicators given a steeper drop in retail sales and the NIER upgrading its projection for average headline inflation this year markedly along with its peak for the Riksbank repo rate. Elsewhere, the Nok slipped in part recognition of a slowdown in Norwegian retail sales, the Cny and Cnh were rattled by more China-US angst over Taiwan and the Try did not buy into the CBRT’s view that the current monetary framework has the power to ensure that Turkish inflation falls. 

29 Mar 2023 - 10:12- Fixed IncomeData- Source: Newsquawk