FX Analysis – USD weaker, AUD , NZD up on firm Yuan fix, JPY jawboning

USD was slightly lower on Monday with DXY hitting a low of 104.140, holding above the 104 support level. News was light with only New Home Sales of any note, which missed modestly to the downside (662k vs the expected 675k). There was some Fed speak, the highlight being Fed hawk Bostic where he reiterated his desire of just one rate cut in 2024, this failed to make much impact on the Dollar though.

AUD and NZD saw gains to differing degrees against the USD with AUD outperforming, continuing the steep rally in AUDNZD to see the pair touching on 1.09 and firmly in overbought territory. Both AUD and NZD supported by the surprise Yuan fix by the PBoC that was much firmer than forecast. AUDUSD initially tested Friday’s low at 0.6510, before the fix and improving risk sentiment saw it reverse course to hit a high of 0.6546.

USDJPY was ultimately flat in a tight ranged session. Some more jawboning from  top currency diplomat Kanda saying that the BoJ has been closely watching “FX moves with a high sense of urgency and will take appropriate steps to respond” saw the talk of intervention arise with Bank of America noting that intervention is seen as a ‘realistic option’ to support the Yen, especially if the USDJPY cross rises to the 152-155 zone.