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CHINA PBOC CONDUCTS CNY50 BILLION VIA 7-DAY REVERSE REPOS FRI

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CHINA SETS YUAN CENTRAL PARITY AT 7.1268 FRI VS 7.1270

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MNI BRIEF: Poilievre Calls QE 'Scam' And Would Limit BOC Remit

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Greenback Rally Fails To Extend Following Fed-Inspired Impulse

FOREX
  • Early on Thursday, the greenback showed initial strength, extending on topside momentum following the hawkish hold from the FOMC. The USD index narrowed in on the best levels for 2023, reaching a high print of 105.74.
  • However, a reversal lower for front-end US yields and considerable weakness for US equity indices dampened the initial greenback optimism which now sees the DXY trade at unchanged levels as we approach the APAC crossover. It is worth noting that we still remain roughly half a percent above pre-FOMC levels.
  • Remaining the underperformer on the session is the Swiss Franc following the surprise hold by the SNB at 1.75%. While Chairman Jordan pointed to the potential for further hikes and noted that the inflation battle is not yet over, some of the language deployed and the SNB playing down the idea of a hawkish pause has also weighed on the CHF, prompting EURCHF to establish a new range around 0.9640, up ~0.60%.
  • Cable remains down 0.4% on the session, although is unchanged from the surprise decision by the Bank of England to hold rates at 5.25%. Initial pressure did see GBPUSD print a fresh near-six month low at 1.2239 before consolidating back around the 1.2300 mark in late Thursday trade.
  • One of the more interesting moves across US hours was the decline for USDJPY, posting an impressive turnaround and reversing the entirety of the Fed inspired gains overnight. The pair printed as high as 148.46 overnight, briefly piercing noted resistance at the Nov 4 2022 high but failed to garner any momentum across the APAC session. A subsequent move back below the 148.00 handle has kept the short-term path of least resistance as lower, with pressure on equities and the lower front-end US yields providing additional JPY tailwinds, that saw a move down to 147.32 as we approach the Bank of Japan decision overnight.
  • The BOJ meeting caps off a busy week for major central bank decisions. Considering the adjustments made to the BOJ’s YCC framework in July, our analysis aligns with the prevailing consensus, anticipating that the BOJ will maintain its existing policies in the upcoming announcement, including the short-term interest rate remaining at -0.1%.
  • Elsewhere on Friday, UK retail sales and Eurozone flash PMI’s will provide the latest signals regarding the health of the Eurozone economy.
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