EUROPEAN FX UPDATE: Yen slide checked by more intense sense of intervention

Analysis details (09:59)

JPY/DXY

It remains to be seen whether the latest barrage of official chat manifests in physical action, but Japan’s Finance Minister Suzuki is scheduled to hold a so called ‘doorstep meeting’ around 10.15BST on the subject of excessive, rapid and one-way currency moves, or pronounced Yen depreciation to be more precise. Moreover, the BoJ is said to have ‘checked’ levels overnight when Usd/Jpy was around 144.90 and this adds to the theory that 145.00 may be being defended before the real line in the sand at 150.00. In response, the headline pair reversed to test bids (including Japanese importers) and psychological support around 143.00 to the detriment of the Dollar and index that extended post-US CPI gains overnight across the board and to top 110.000 in the proces. The DXY duly descended into a 109.930-370 range and will look towards PPI data for further pointers on the inflation outlook.

GBP/EUR

Perversely perhaps, the Pound bounced firmly in spite of softer than expected UK inflation data, albeit after an initial decline and following very heavy losses on Tuesday, with Cable probing 1.1550 compared to a circa 1.1480 low and Eur/Gbp closer to 0.8650 than 0.8700 as the Euro remained toppy against the Greenback around parity where decent option expiry interest sat (1.92 bn rolling off at the strike). However, Eur/Usd may break range pending the tone of comments from ECB’s Lane due from 12.00BST rather than Eurozone IP in the interim even though national releases indicate a beat vs consensus. 

NZD/AUD/CHF/CAD  

All taking advantage of the Buck’s downturn, or latching on to the coattails of the Yen, as the Kiwi recovered from a sub-0.6600 overnight base in wake of a wider than forecast NZ current account deficit to peer back over the round number, the Aussie bounced from the low 0.6700 area to almost 0.6750, the Franc pared losses around 0.9600 and the Loonie between 1.3194-48 parameters ahead of Canadian manufacturing sales.

SCANDI/EM

In contrast to Sterling, the Swedish Crown got a boost from Swedish CPI and CPIF readings that topped consensus and underpinned expectations for a bolder Riksbank hike next week, but the Indian Rupee failed to derive impetus from a softer than anticipated headline WPI, and the Yuan remained under pressure on Chinese Covid and US sanction grounds regardless of yet another strong PBoC midpoint fix. 

14 Sep 2022 - 09:59- Fixed IncomeData- Source: Newsquawk