Daily FX Wrap: spotlight switches swiftly from New York to Rome

DXY

More choppy trade post-Fed, but ultimately the index and broad Usd is grinding higher vs G10 counterparts on the prospect or rather renewed guidance for further policy normalisation through to 2020, but also as a bi-product of weakness elsewhere. The DXY is currently just over 94.700 vs 94.207 at the low and not far from 94.000 pre-FOMC yesterday.

CHF   

Among the major laggards all day, but ending Thursday’s EU session as the clear underperformer as the Franc extends losses vs the Dollar towards 0.9750 and not that far from 1.1400 vs the Eur even though the single currency is weak in its own right.

AUD/EUR

The next biggest losers against the Greenback on US-China trade-related contagion and ongoing Italian budget divisions ahead of potentially key meetings pencilled in for later today, assuming no delays or postponements as the wrangle over the 2019 deficit and apparent difference of opinions seemingly grows even wider (Economy Minister Tria sticking to sub-2% vs demands for up to 2.6%). Aud/Usd now testing bids ahead of 0.7200 and Eur/Usd only just holding above a series of Mas from around 1.1665 having failed to maintain recovery gains above 1.1700 on firmer than forecast German inflation data.

NZD/JPY/CAD

All in the region of 0.3-0.35% adrift vs their US peer or rival, with the Kiwi retreating further from post-RBNZ peaks circa 0.6675 to around 0.6625 as OCR guidance was left neutral and unlike the Fed tightening is not envisaged until late 2020, assuming no cut first if needed. Usd/joy held some way ahead of technical support and decent option expiry interest (112.35 and 112.40-50 in 1.1 bn) to retest resistance around 113.00 following yet more dovish talk from BoJ Governor Kuroda. The Loonie derived some traction from a pick-up in Canadian average earnings and upward revision to back data, ahead of BoC’s Poloz, but failed to rebound through 1.3050 as NAFTA relations with the US appear to be as poor as ever, if not worse.

GBP

Cable managed to hold above 1.3100 after latest encouraging rhetoric from the EU on Brexit deal negotiations and recovered lost ground vs the Eur to revisit 0.8900, but derived little independent impetus from BoE’s Haldane who did not divulge much at all on the policy outlook.

EM      

In stark contrast to the overall Dollar bid trend, several regional currencies clawed back more lost ground, with the Zar now not far from 14.0000, Try back above 6.0000 (on speculation about Turkey releasing US Pastor Brunson, potentially) and the Rub up over 66.0000 (against the backdrop of still firm Brent).

(RANsquawk)