EUROPEAN FX UPDATE: Yen the fall guy as Fed chair Powell boosts the Buck

Analysis details (09:51)

JPY/DXY

120.75 is just about holding, but Usd/Jpy soared through 120.00 once resistance in the form of a Fib retracement level at 119.52 was breached with comments from BoJ Governor Kuroda highlighting divergence from the Fed hot on the heels of hawkish rhetoric from chair Powell. In short, the former reiterated that it is too early to talk about the BoJ ending its powerful easing, including ETF purchases in stark contrast to the latter who underscored chances of 50 bp hikes at one or more upcoming FOMC meetings, a higher terminal rate if required and the prospect that QT could start in May. However, the Dollar index has peeled away from best levels within a 98.972-98.496 range as a pick-up in risk sentiment lifts the likes of Sterling and corrective losses in EGBs helps the Euro pare declines.

NZD/AUD/GBP

The Kiwi has regained composure and 0.6900+ status vs the Greenback, irrespective of a sharp deterioration in Westpac NZ consumer confidence, while the Aussie is tagging along on the 0.7400 handle, but lagging behind as the Aud/Nzd cross eases back through 1.0750 ahead of preliminary PMIs on Wednesday. Elsewhere, the Pound rebounded well from the low 1.3100 zone in the run up to several potentially big UK events kicking off from tomorrow really with inflation data and the Spring Statement.

EUR/CHF/CAD      

As noted above, catch-up trade in Bunds and Eurozone debt peers along with a pull-back in oil prices appear to have provided the Euro with enough impetus to claw back losses vs the Buck, but decent option expiry interest between 1.1000-10 (1.35 bn) might be influential ahead of the NY cut, while the Franc will be wary that the SNB review is looming as it straddles 0.9350 against its US counterpart and hovers just shy of 1.0300 vs the single currency. Meanwhile, the Loonie has slipped back under 1.2600 as crude slips in advance of Canadian ppi.

SCANDI/EM 

The Sek is probing 10.4000 again vs the Eur amidst renewed risk appetite, while the Nok is undermined to an extent by Brent reversing almost Usd 7/brl from best levels very close to Usd 119.50 and the Huf awaits the NBH for some independent impetus with the consensus for a 75 bp hike to 4.15%, but some speculation that the Bank may choose to tighten by 100 bp or perhaps even more.

22 Mar 2022 - 09:50- Fixed IncomeBank Speaker- Source: newsquawk