FX Morning Colour: Kiwi and Pound flank orderly G10 rank pre-Fed and other Central Banks


Amidst very rangy or cagy trade in Usd/majors ahead of the FOMC, the Kiwi and Pound are just standing out from the crowd as outliers, with the former outperforming in wake of more encouraging NZ macro news overnight, as a marked improvement in the business outlook overshadowed a worse than expected trade deficit, on balance. Nzd/Usd rebounded towards 0.6700, but is now back down around 0.6650 vs Cable unable to reach 1.3200 and retreating towards 0.8950 again vs the EUR. Note, some bank rebalancing models point to buy signals for the single currency, and SEK, but this is not really evident in Eur/Usd (yet) that remains capped ahead of 1.1800, or Eur/Sek around 10.3700, with mega option expiries in the headline pair in particular perhaps keeping moves in check (1.1755-75 parameters between 1.1725-35 in 2bn, 1.1740-50 in 3.1 bn and 1.1800 in 1.7 bn for the NY cut.


The next best G10 currencies in terms of gains vs a still soggy Usd (DXY only just holding above 94.000), with the Aud maintaining 0.7250+ status and Jpy defending 113.00 again, even though month/quarter/Japanese half year end positioning is said to be net negative. Expiry interest may also be influential here with some decent layered run-offs from 112.95-113.00 down to 112.30-35 (1-2 bn), and between 0.7250-55 in Aud/Usd (1.1 bn).


Marginal laggards as the Loonie continues to pivot 1.2950 amidst the ongoing NAFTA stalemate, but cushioned somewhat by elevated oil prices, while the Franc is anchored around 0.9650 and 1.1350 vs the Eur after a sharp deterioration in ZEW’s Swiss investor sentiment index that underscores SNB caution about risks to the economy.


The Try has taken over the mantle as main regional mover, albeit with the Zar not far behind and both firmer vs the Usd. The Lira appears to be encouraged by more assurances about CBRT independence from Turkey’s Finance Minister, while the Rand awaits an address from President Ramaphosa later today. Usd/Try at the lower end of a circa 6.2000-1000 band and Usd/Zar also nearer the base of 14.3800-2750 parameters.