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USD Dominates, Fresh Lows For A$, NZ$, CNH And KRW

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EM BulletFixed IncomeBulletMarketsEmerging MarketsForeign Exchange

The DXY is back above 104.00, but stronger gains seen against commodity FX and Asian FX

  • The USD has been on the front front for much of the day, with AUD/USD and NZD/USD down 0.80% and 0.90% respectively. Only JPY is higher against the USD. EUR/USD is modestly weaker, but holding above 1.0500 at the time of writing.
  • Positive Asian equity sentiment from yesterday has unraveled, all major markets weaker in the region. Fresh community transmission of Covid in Shanghai dashing hopes of an easing of restrictions in the near term. Equity futures in the US have also turned more negative, presenting an additional headwind.
  • Commodity sentiment also softened, Brent crude back down and Iron ore back to $126/tonne.
  • USD/CNH also broke higher, rising above 6.8000. The market shrugged off the marginally stronger than expected CNY fix. The covid news above not helping, while PBOC Dep Gov Chen noted that the central bank has guided loan interest rates to decline and increased focus on growth stabilsation.
  • Other USD/Asia pairs have tracked USD/CNH higher, albeit with a beta lower then 1. The exception has been USD/KRW, where spot is up 1.2%, and breaking above 1290. 2020 highs are now in sight for this pair.
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The DXY is back above 104.00, but stronger gains seen against commodity FX and Asian FX

  • The USD has been on the front front for much of the day, with AUD/USD and NZD/USD down 0.80% and 0.90% respectively. Only JPY is higher against the USD. EUR/USD is modestly weaker, but holding above 1.0500 at the time of writing.
  • Positive Asian equity sentiment from yesterday has unraveled, all major markets weaker in the region. Fresh community transmission of Covid in Shanghai dashing hopes of an easing of restrictions in the near term. Equity futures in the US have also turned more negative, presenting an additional headwind.
  • Commodity sentiment also softened, Brent crude back down and Iron ore back to $126/tonne.
  • USD/CNH also broke higher, rising above 6.8000. The market shrugged off the marginally stronger than expected CNY fix. The covid news above not helping, while PBOC Dep Gov Chen noted that the central bank has guided loan interest rates to decline and increased focus on growth stabilsation.
  • Other USD/Asia pairs have tracked USD/CNH higher, albeit with a beta lower then 1. The exception has been USD/KRW, where spot is up 1.2%, and breaking above 1290. 2020 highs are now in sight for this pair.