EUROPEAN FX UPDATE: Yen relishes slide in yields, Pound rues slump in consumption

Analysis details (09:55)

DXY/JPY/GBP

Another data-related slap for Sterling as UK retail sales came in well below expectations to add to the disinflationary impact of cooler CPI and other price metrics earlier in the week. Cable retreated through 1.2400 in response and Eur/Gbp topped 0.8760 from sub-0.8740 amidst a deeper retreat in implied rates and more pronounced dovish shift in BoE policy perceptions. This in turn helped the Greenback regain poise after Thursday’s retreat and the index matched its prior session high at 104.55 before US Treasuries latched on to the bid in Gilts and the curve bull-flattened to the benefit of the Yen in particular. Indeed, Usd/Jpy reversed sharply from 150.77 to the brink of 149.50 via stops at the psychological 150.00 level and dragged the DXY back down to 104.21 given its greater weight in the basket.

AUD/CAD/CHF/NZD    

All firmer against their US counterpart in volatile trade due to the aforementioned Pound depreciation and Yen resurgence, with the Aussie rebounding towards 0.6500 from just over 0.6350 and encouraged by a broad improvement in risk sentiment, the Loonie straddling 1.3750 ahead of Canadian producer and raw material prices, the Franc keeping afloat of 0.8900 following a decent recovery in Swiss industrial production and the Kiwi nearer the top of a 0.5979-41 range in wake of stronger NZ input and output producer prices.

EUR

The Euro was somewhat caught between stalls vs the Buck as EGB yields also slumped and Eur/Usd failed to close above a pivotal technical level yesterday. Moreover, a stack of decent option expiries surrounded the headline pair, from 1.0800 to 1.0900-10 beyond 1.0826-57 parameters.

SCANDI/EM

Declines in Swedish unemployment rates may have given the Sek a fillip, while the Nok could have been relieved by relative stability in oil compared to recent turmoil, but the upbeat market mood also underpinned the Crowns. Elsewhere, the Cny and Cnh drew more positives from China-US dynamics, as the Chinese Commerce Ministry said the two countries agreed to hold a first Commerce Working Group meeting in Q1 2024, and PBoC efforts to ease tight funding conditions by reportedly asking some lenders to cap interest rates on an interbank debt instrument this month. Conversely, the Try derived little comfort from the latest CBRT survey showing only modestly lower end 2023 and year ahead Turkish CPI projections.

17 Nov 2023 - 09:55- Fixed IncomeData- Source: Newsquawk