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Greenback Weakness Prevailing, CHF Underperforms

FOREX
  • With few discernible headlines surrounding banking sector risk sentiment, the greenback remained under pressure on Tuesday, falling against all G10 currencies apart from the Swiss Franc.
  • The extension of weakness for the USD index (-0.42%) has now seen the entirety of Friday’s bounce reversed and narrows the gap with the March lows at 101.92.
  • In line with the greenback move, EURUSD continues to trade with a bid tone and has moved steadily above the 1.08 handle today. For bulls, clearance of 1.0930 would reinstate the recent bull theme and signal scope for a climb towards 1.1033, the Feb 2 high.
  • With equities on the back foot, the Japanese Yen has outperformed and USDJPY sits 0.70% lower on Tuesday. The pair briefly matched the Monday lows at 130.41 before a substantial bounce, however, the pair is gravitating back towards those lows approaching the APAC crossover. Little option interest at the Tuesday 10am cut, however interest builds later in the week to month-end: just over $4.5bln rolls off between Y130.00 - 131.00 across the Thursday/Friday cuts, which could help define the range into the end of the week.
  • Further weakness, however, through 129.64 would mark a resumption of the March downleg and put prices at the lowest levels since early February. 129.12 undercuts as more notable support - the Feb 2 High.
  • Swiss Franc weakness was notable throughout today’s session, making it the worst performer in G10 to partially reverse the outperformance noted at the tail-end of last week. Worth flagging yesterday's sight deposits data surged higher - the first meaningful rise in sight deposits since 2020. Though this doesn't necessarily reflect FX intervention, it likely suggests Swiss banks were users of emergency liquidity facilities made available last week - and may be working against CHF haven flows this week.
  • CAD annual budget release and Australian CPI headline the overnight docket before US pending home sales on Wednesday. Focus remains on the latter part of the week where Eurozone CPI prints and US Core PCE price index data are scheduled.
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