Free Trial

European FX Space Back On Its Feet

FOREX

G10 FX space saw some unwinding of yesterday's price action, with the European FX bloc finding poise. Headline flow was sparse and did not provide anything to diffuse concerns related to Italy's political turmoil and Europe's energy crisis.

  • Shipment orders data published by Nord Stream AG showed that gas flows through the pipeline will resume at ~40% of capacity, slightly more than expected, with the planned maintenance due to finish at 06:00 CET. Still, actual volumes remain clouded by uncertainty until realised, while the risk of further weaponisation of gas shipments by Russia remains.
  • Yen volatility briefly spiked (USD/JPY seesawed within a 50-pip range) as the BoJ kept its monetary policy settings and forward guidance unchanged, but tweaked economic forecasts to reflect stronger headwinds to growth and upside risks to inflation. The Bank flagged concern with sharp fluctuations in FX and commodity markets. As the dust settles, JPY is roughly where it was before the announcement.
  • Traditional safe havens were out of favour despite questionable performance from regional stock markets. The greenback and yen were broadly softer, while the CHF lagged its European peers.
  • The kiwi dollar landed at the bottom of the G10 pile, despite the lack of any obvious domestic catalysts. Correction of yesterday's outperformance may have played a role here.
  • Central bank activity will remain in high gear, with the ECB preparing to announce its monetary policy decisions & BoE Chief Economist Pill due to speak. In the EM space, rate reviews are due in Indonesia, Turkey and South Africa.
  • On the data front, focus turns to U.S. initial jobless claims & Philadelphia Fed Business Outlook.

To read the full story

Close

Why MNI

MNI is the leading provider

of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.

Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.