FOREX: EUR Slips on French, JPY Volatility Remains in Focus
Feb-21 10:04
- The Euro is softer on Friday following the weaker-than-expected French services PMI. EURUSD slipped from around the 1.05 mark to 1.0468 and subsequently stabilised near session lows on the better-than-expected German manufacturing print. Overall growth prospects in the region continue to appear stagnant, while a renewed uptick in output charges will be of concern to ECB policymakers. 1.0533 the Jan 27 high and a reversal trigger remains key on the topside for EURUSD.
- EURGBP also sits moderately weaker and has been consolidating its position below 0.8300 over the past three sessions. A resumption of weakness would once again refocus attention on 0.8248, the Feb 3 low and the bear trigger, before 0.8203, the lowest point of a multi-year range.
- Elsewhere, the volatile Japanese yen remains of key interest in G10 FX markets. After slipping to a fresh two-month low of 149.29, comments from BOJ Governor Ueda have sparked an impressive relief rally for USDJPY. Ueda told the Diet Friday the Bank would buy bonds nimbly should yields rise sharply, prompting USDJPY to rise around 1% from session lows to a 150.74.
- Losses for the week remain around 1.2% having cleanly traded through the bear trigger on Thursday. 148.65 is the next downside mark and key support.
- AUDUSD has declined 0.25% on Friday, with the overnight high closely coinciding with key resistance at 0.6414 - marking both the 100-dma as well as the 38.2% retracement of the Sep 30 ‘24 - Feb 3 bear leg. Clearance here opens the next leg higher for the pair, making 0.6471 the next target.
- Canadian retail sales and US flash PMIs headline Friday’s calendar from here, with existing home sales and UMich (2nd reading) also crossing.
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Jan-22 10:00
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SNB: SNB President Schlegel Reaffirms Discontent With Negative Rates
Jan-22 09:59
- SNB President is overall sticking to common themes in his interview at the sidelines of the World Economic Forum today. The following headlines have crossed from an interview with Bloomberg TV in Davos:
- SNB Doesn't Like Negative Rates But Can Use Them
- We're Not Uncomfortable On Inflation Right Now
- SNB Is Ready To Intervene In Fx Market If Needed
- SNB Isn't Discussing New Franc Cap At The Moment
- The comment on negative interest rates compares to Schlegel's Dec 12 statement in the aftermath of the last policy meeting of "SNB Doesn't Like Negative Rates But They Do Work". Also, note that while the SNB has surprised in the past on changes in their FX intervention policy, their FX holdings data indeed points towards comparatively little movement here in recent months and in real, trade-weighted terms, CHF has depreciated recently and remains well below its highs.
- The Swiss Franc saw little movement on the headlines and remains a touch stronger on Wednesday, underpinned by strong domestic equity performance and CH government bonds underperforming against their EGB peers.
- USDCHF has extended its pullback from cycle highs to ~1.7%, with weakness extending on a break of the 20-day EMA earlier this week. Spot remains well above firm support at 0.8972, the 50-day EMA.
