EUROPEAN FX UPDATE: Yen reclaims safe haven mantle as China’s Covid woes mount

Analysis details (10:02)

DXY/JPY/EUR

The Yen and Euro could well have been underpinned by month end demand, but the former clearly outperformed amidst risk-off positioning following another record rise in Chinese coronavirus cases. Moreover, the latest deterioration in conditions prompted demonstrations and hit oil prices particularly hard to the benefit of crude importers, and Usd/Jpy saw stop-driven sales on a breach of a recent low to trade around 138.54 or so, while Eur/Usd rebounded through 1.0400 as the Dollar index retreated within a 106.520-105.530 range. However, hefty option expiry interest at the 1.0425 strike (1 bn) and between 1.0400-1.0390 could still act as a drag even though the Euro scaled semi-psychological resistance circa 1.0450 having topped out just a pip below last Thursday.

AUD/NOK/CAD

At the other end of the G10 spectrum, the Aussie fell in sympathy with the Yuan and also in wake of considerably weaker than forecast final retail sales, while the Norwegian Krona and Loonie were undermined by sharp declines in WTI and Brent to Usd 73.60/brl and Usd 80.61/brl at one stage. Aud/Usd straddled 0.6700, Usd/Cad bounced firmly from sub-1.3400 towards 1.3475 and Eur/Nok probed 10.3550 from 10.2620 after a downturn in retail sales, as well.

CHF/XAU

The Franc shrugged off a dip in Swiss sight deposits at domestic banks and picked up a grinding bid with some traction from softer global bond yields, as Usd/Chf eased back from 0.9480 to almost 0.9400 and Gold climbed off a virtual double base just a few Bucks below Usd 1750/oz to peer over Usd 1762.50 in similar safety premium fashion.

GBP/NZD

Sterling lagged as a cyclical currency with Cable fading just beyond 1.2100, but the Pound was also hampered by RHS orders in the Eur/Gbp cross through 0.8600 and the 100 DMA (0.8617) that some market scribes put down to spot November 30 flow. Elsewhere, the Kiwi felt contagion from its Antipodean neighbour and commodities as Nzd/Usd waned ahead of 0.6250 before finding underlying bids not far beneath 0.6200.

SEK/EM  

The Sek held up better than its Scandinavian counterpart thanks to less correlation with oil, but the Mxn managed to shrug off soft crude and stayed above 19.5000 vs the Usd, while the Cny and Cnh pared some pandemic declines when Beijing doubled down on efforts to ensure that the rapid spread of Covid is curbed and its economic impact kept to a minimum.

28 Nov 2022 - 10:02- EnergyData- Source: Newsquawk