EUROPEAN FX UPDATE: Yen maintains recovery momentum against the Buck

Analysis details (10:24)

DXY/JPY

It’s far too early to talk in terms of a ‘turnaround Tuesday’ for the Greenback and its peers by default, but the Dollar index faded again after a firmer bounce from 101.590 to 102.280 yesterday and close on the cusp of a key Fib retracement level a fraction below 102.000. Softer US Treasury yields were a factor, while the Yen also regained poise with the aid of Japanese exporter sales in Usd/Jpy ahead of 131.00 that pushed the headline pair back down to probe 130.00, irrespective or regardless of mixed preliminary PMIs overnight (manufacturing unchanged from previous and still sub-50, but services activity stronger and sufficient to lift the composite into mild expansion territory from contraction). However, the DXY contained losses between 102.170-101.710 parameters awaiting the US PMIs and Richmond Fed survey for further independent direction.

NZD/CHF/EUR

The Kiwi perked up in advance of NZ CPI data rather than a dip in the Business PSI to breach 0.6500 vs its US counterpart briefly and claw back losses against the Aussie from 1.0844 towards 1.0800, while the Franc peered over 0.9200 with some impetus from a wider Swiss trade surplus before retreating to circa 0.9225 and the Euro was underpinned by latest hawkish vibes from ECB President Lagarde, but stalled pips short of 1.0900 even before taking on board contrasting flash Eurozone PMIs (French manufacturing and German services returned to growth, but the opposing sectors more contractionary to counter firmer than forecast pan EZ readings on all counts). 

CAD/AUD/GBP  

Caution ahead of the BoC kept the Loonie in check, while the Aussie was capped by half round number resistance in wake of inconclusive PMIs and NAB Business survey findings, but Sterling was clearly rattled by the weaker elements of the UK’s prelim PMIs (services and composite sliding further beneath 50.0 to offset slightly less contraction on the manufacturing front. Usd/Cad was mostly elevated within a 1.3380-47 range, Aud/Usd eased from 0.7049 to the low 0.7000s pre-Aussie inflation metrics and Cable reversed from just above 1.2400 to within single digit pips of 1.2300.

SCANDI/EM

Divergence between the Sek and Nok as the former was encouraged by a fall in Swedish 1 year money market inflation expectations, but the latter lost traction from Brent that recoiled from Usd 88.44/brl to Usd 87.31. Elsewhere, the Inr continued to retrace gains in recognition of ongoing RBI intervention and the Zar decoupled from Gold on SA specifics, such as persistent Eskom power outages and perhaps some jitters before the SARB on Thursday.

24 Jan 2023 - 10:24- Fixed IncomeData- Source: Newsquawk