EUROPEAN FX UPDATE: Yen retreats post-retracement and Buck bounces pre-NFP

Analysis details (10:19)

JPY/DXY

The Yen was probably prone for a fall after the turn of March-April, Q1/Q2 and Japanese fy end, but a few other factors exacerbated the reversal from repatriation highs including a firm rebound in US Treasury yields and a drab, if not quite as bad as expected Japanese Tankan survey along with latest comments from Finance Minister Suzuki that sounded less concerned about recent currency developments. In short, he reiterated that sharp moves are undesirable, but appeared to take the pressure off the BoJ to intervene by adding that it has a mandate for inflation not a target for FX. Usd/Jpy cleared several near term resistance levels on the way to breaching 122.00 and 122.50 before fading around 122.75 in the run up to US jobs data, while the Dollar rebounded further off a firmer base on the 98.000 handle to reach 98.620 at one stage.

AUD

At the other end of the major spectrum, 0.7500 remains pivotal and remarkably magnetic for the Aussie against the Greenback, even though risk sentiment wavered overnight and the Caixin manufacturing PMI contracted more than the official Chinese NBS equivalent.

NZD/CAD/EUR/GBP/CHF

All narrowly mixed and rangy vs their US counterpart in what could be described as typically tight or cautious trading conditions ahead of a BLS report, though this also comes after some very volatile and whippy price action. The Kiwi is holding within 0.6900-50 parameters, the Loonie is still tethered around 1.2500, while the Euro appears to have arrested its sharp reversal just under 1.1050 where a few light stops were triggered according to market contacts. Elsewhere, Sterling is contained within 1.3100-50 bounds and the Franc bound between 0.9250-15 in wake of fractionally firmer than forecast Swiss CPI on a m/m basis and a decent manufacturing PMI beat. For the record, Eurozone PMIs were weaker than anticipated or downwardly revised from preliminary prints in keeping with the UK headline reading, but flash Eurozone inflation was much stronger than expected, though preempted by the national reports already released. 

SCANDI/EM   

Some respite for the Sek and Nok that was hit harder on Thursday, with the former shrugging off a slowdown in Sweden’s manufacturing PMI on the premise that it may be down to specific issues involving temporary production shutdowns of ops in Russia. Meanwhile, the latter could be benefiting from a stronger Norwegian manufacturing PMI, dip in the nsa jobless rate and reports that the Government is planning to unveil a Nok 14.1 bn fiscal package. Conversely, the Cnh and Cny has eased back in wake of the aforementioned contractionary Chinese Caixin PMI, a softer PBoC onshore fix, 1 week reverse repo drain and speculation about a RRR cut.

01 Apr 2022 - 10:19- Fixed IncomeData- Source: Newsquawk