EUROPEAN FX UPDATE: Yen retreats sharply and broadly as BoJ remains ultra-easy

Analysis details (09:43)

DXY/JPY/EUR

Confounding all the hawkish sources suggesting that a higher bar for YCC may be in the offing, the BoJ only adjusted its official ceiling to 1% within a +/- 100 bp range around zero having already made the target band more flexible from +/- 50 bp by extending the upper limit. Moreover, the accompanying statement and post-meeting press conference from Governor Ueda retained dovish guidance via pledges to patiently continue monetary easing, albeit with the decided new measures and no hesitation to deliver additional easing, if necessary. Hence, Usd/Jpy snapped back up through 150.00 towards 150.50 amidst widespread Yen weakness in crosses due to ongoing policy divergence, with Eur/Jpy on the cusp of 160.00 and giving Eur/Usd a boost indirectly. Indeed, the latter pairing gathered more momentum to secure a firmer grasp of the 1.0600 handle and this in turn weighed on the Dollar index to the extent that it faded from 106.45 to retest psychological support at 106.00 into month end and awaiting the Fed on Wednesday. 

NZD/AUD

Not quite all change down under, but the tide turned in favour of the Kiwi over the Aussie following an almost exuberant ANZ business survey to overshadow another downturn in NZ building consents. Nzd/Usd bounced from 0.5824 to 0.5857, Aud/Nzd reversed from 1.0900+ to 1.0879 and Aud/Usd was capped around 0.6350 with some downside pressure in acknowledgment of disappointing Chinese NBS PMIs.

GBP/CAD/CHF

The Pound continued to benefit mainly at the Buck’s expense as Cable pivoted 1.2150, while the Loonie was cushioned between 1.3818-52 parameters ahead of monthly Canadian GDP as crude prices stabilised and the Franc was encouraged by the fact that Swiss retail sales were not as weak as feared, with Usd/Chf hovering just above 0.9000.

SCANDI/EM

A change in fortunes for the Sek and Nok as the former got some respite from improved risk appetite, but the latter could not glean traction from steady Brent given the Norges Bank raising its daily FX purchases to 1.4 bn for November from 1.2 bn this month. Elsewhere, the Czk was hampered Czech GDP contracting more than forecast in Q3 and the Pln by a slowdown in Polish CPI, while the Try was not that impressed with a narrower Turkish trade deficit and the Cny/Cnh were undermined by the aforementioned misses in China’s unofficial PMIs.

31 Oct 2023 - 09:43- Fixed IncomeData- Source: Newsquawk