EUROPEAN FX UPDATE: Yuan deflated and Norwegian Crown resuscitated

Analysis details (10:09)

DXY/JPY

Far from all change, but the Greenback recouped some losses against the Yen on a combination of consolidation in US Treasury yields off post-jobless claims lows and dovish BoJ vibes via sources ahead of next week’s policy meeting. In short, the Bank still sees a need to continue with monetary stimulus, as hitting the price goal remains out of sight and there is little need to tweak YCC in June, albeit inflation has been stronger than expected. Essentially echoing sentiments expressed by Governor Ueda repeatedly, though enough to prompt a firmer rebound in Usd/Jpy to 139.72 from 138.76 and closer to 1.1 bn option expiries at 140.00 than 1.2 bn at 139.00. On the flip-side, this provided the Dollar index with a bit more traction between 103.310-550 parameters following further fall-out from the aforementioned spike in initial claims.

CNY-CNH/NOK  

The Yuan held above Thursday’s lows in onshore and offshore terms amidst reports that US Secretary of State Blinken’s belated trip to Beijing is being planned for the coming week, but the Cny and Cnh were undermined by softer than consensus Chinese inflation metrics in stark contrast to Norwegian headline and core CPI that came in much stronger than anticipated to the benefit of the flagging Krona.

CHF/EUR/GBP/AUD/NZD

All conceding ground to the bouncing Buck, with the Franc retreating through 0.9000, the Euro from the high 1.0700 area after posting its biggest single day gain in months yesterday, Sterling waning around 1.2550 against the backdrop of UK debt outperformance relative to bond peers, the Aussie fading from fresh 0.6700+ post-RBA peaks in sympathy with the Yuan and the Kiwi losing momentum from just over 0.6100.

CAD    

The Loonie fared better than most and straddled 1.3350 vs its US rival awaiting Canada’s LFS for further direction in wake of comments from BoC Deputy Governor Beaudry underlining why the Bank reverted to tightening on Wednesday, including the assessment that there appears to be more momentum in demand than we expected, surprise over the extent of Q1 consumption growth and the unexpected strength of the rebound in goods spending. However, he also stressed data-dependency as nothing is determined looking forward when asked if the BoC has a tightening bias and stated that the Bank is taking one rate decision at a time.

SEK/EM

No solace for the Sek from mixed Swedish macro releases or the latest Riksbank Financial Stability Survey showing that the economic situation is expected to remain weak in the coming six months, and very little respite for the Try as Turkish IP missed consensus by some distance and confirmation that Erkan will takeover as CBRT Governor hardly instilled markets or investors with confidence.

09 Jun 2023 - 10:09- Fixed IncomeData- Source: Newsquawk