EUROPEAN FX UPDATE: Yen revival keeps Greenback capped pre-NFP

Analysis details (10:01)

DXY/JPY

Some very choppy price action in currencies and other asset classes approaching the end of a hectic first week of July that culminates in the latest US and Canadian jobs data. However, the Dollar index remained relatively contained either side of 103.000 with mainly upbeat US macro releases offering underlying support to counter downside pressure applied by the Yen’s ongoing recovery from recent lows. Indeed, Usd/Jpy extended its reversal to probe 143.00 from just above 144.00, with market contacts noting that stops may have been tripped when yesterday’s circa 143.55 low was breached, and the headline pair may well continue its retracement on technical grounds as this also saw a Fib give way. 

NZD/AUD    

Having caved to the inevitable risk aversion when the wheels were in danger of really coming off on Thursday, a more consolidative mood helped the Kiwi and Aussie regain composure between 0.6154-75 and 0.6618-43 parameters vs the Buck respectively. Moreover, Aud/Usd derived some indirect traction from Usd/Cny and Usd/Cnh remaining below psychological levels (7.2500 and 7.2600) after yet another big out of sync with spot PBoC midpoint fix.

GBP/CHF/CAD/EUR 

All marginally softer against their US counterpart and feeling the weight of the aforementioned Yen resurgence via crosses, as the Pound drifted down from around 1.2749 towards 1.2725, the Franc from 0.8949 to 0.8968, the Loonie to 1.3387 from 1.3359 and Euro from 1.0900 to 1.0868. Next up for Cable, aside from NFP, BoE’s Mann in NY, while Usd/Chf largely shrugged aside unchanged Swiss jobless rates, sa measure as expected, Usd/Cad looks forward to the Canadian-US labour market report head-to-head and Eur/Usd is mired is flanked by decent option expiry interest (including 1.1 bn at 1.0850 and 1.3 bn at 1.0900). On that note, a strong Canadian LFS vs disappointing US BLS metrics could yet put 1.5 bn expiries in Usd/Cad at the 1.3300 strike in play.

SCANDI/EM 

Data provided the Sek and Nok with a reprieve as Swedish monthly GDP showed marginal growth against consensus for stagnation and Norway’s mainland expanded considerably more than forecast, but the Huf weakened further as Hungarian headline CPI effectively matched consensus and the core was a bit cooler and the Czk failed to derive impetus from a wider than anticipated Czech trade surplus or industrial production surprisingly picking up pace rather than reversing most of the prior month’s rise.

07 Jul 2023 - 10:01- Fixed IncomeData- Source: Newsquawk