Credit Agricole

Asia overnight

Global risk assets are haunted by the dual threat of tighter global financial conditions courtesy of the hawkish Fed and global growth fears. And, while the concerns about the European economic outlook have been around since the war in Ukraine began in February, more recently investors started worrying about the outlook for Asia, because of the worsening pandemic situation in China as well as some renewed fears about the country’s technology sector. Moreover, the efforts to boost oil supply seem to be helping global energy prices come off the boil and that is eroding the appeal of the most popular FX trade so far this year – longs in high-yielding currencies of energy exporters. Against this backdrop, the USD remains the high-yielding, safe-haven king of G10 FX with only the CAD and SEK able to hold their ground vs the currency. In contrast, the EUR has emerged as the biggest underperformer, dragged lower by lingering growth fears in the wake of the latest EU sanctions on Russia as well as growing political risks ahead of the French presidential vote over the weekend.

Citi

European Open

G10 FX lacked inspiration through Asia trade as price action was subdued and activity dwindled. Central banks rate outlook remains top of mind and a key theme as we now see seven of the G10 central banks with over 100bps of tightening priced this year (total ~1400bps of hikes). RBI’s joined the pack with a tweak to interest rate corridor, offering a new step toward normalization which sent 10y yields back above 7%. JPY saw some short-lived gains as an ex-BoJ official appeared in the press suggesting BoJ could drop YCC sooner rather than later. USD was supported as Treasury curve got back to flattening as fresh 2y selling pushed short-end yields higher.

Central banks remain a dominant theme after a hawkish shake-up in the ECB minutes on Thursday, we prepare for the doves on parade today with ECB’s Panetta, Stournaras, Makhlouf and Herodotou all due to speak. Finally, we see room for EUR risk premiums to rise as we head into the first round French elections on Sunday as polls continue to narrow. Otherwise, we see top tier data with CPI for TWD and HUF.

CIBC

FX Flows

EUR$ continued to trickle lower. Earlier this morning, German Chancellor Scholz said will use the 120-day transition to implement ban on coal, in other words, will continue to make use of Russian coal. US Treasury Department said it has officially blacklisted 2 Russian businesses, diamond-miner and a shipbuilder - barring their access to the US financial system. Focus will be previous low 1.0806. Small EUR put strikes due today 1.0850 and 1.0825. Nothing much above. ECB speakers today, de Cos, Centeno, Panetta and Stournaras. First round vote for the French Presidency this weekend, continues to loom large, with market increasingly cautious given the rise in support for Le Pen in the polls. Latest from BBC said if Le Pen does make it through to the 24 April run-off, opinion polls suggest for the first time that a Le Pen victory is within the margin of error.