Credit Agricole

Asia overnight

The USD has extended its gains against all its G10 FX peers at the start of this week, as the Antipodeans’ FX are underperforming in the wake of broad equity losses. Of special note, NZD/USD has dipped below 0.6350 for the first time since H120, while AUD/USD has slipped back toward the big psychological support of 0.70. The publication of resilient Chinese external trade data for April gave them no relief whatsoever, as the concerns expressed by China’s Premier Li Keqiang over the Covid situation in Beijing and Shanghai have possibly weighed more.

Meanwhile, the CAD and NOK have only been marginally spared by the steady oil prices following the G7 announcement over the weekend that it will gradually phase out imports of Russian oil, without giving too much details either. Outside of the commodity bloc, the low-yielders are also struggling against the USD, as UST yields have for now held up well at the start of the week. USD/JPY has rallied back to 131, while marginally above-consensus labour earnings data in Japan are unlikely to sway BoJ policymakers just yet.

Citi

European Open

Monday morning saw risk-off tones permeate through markets, with concerns over geopolitical risk prevailing on Russia’s Victory Day holiday. USD was the only currency in the green in the G10 complex, with DXY up 0.34%. AUD and NZD were down over 1% as high beta currencies were hit. The former currently sits close to the psychological resistance of 0.7000. INR set a new record low, breaking above the 77 handle, while CNH dropped despite a stronger than expected yuan fixing that was set for the fifth consecutive day. Chinese trade balance data saw exports and imports come in above the consensus figures. Oil markets pared losses from an initial dip early in Asian trading to trade slightly in the green. Meanwhile, equities continued their decline from Friday. UST front end yields were down slightly.

Today’s focus will likely remain on the risk of escalation in the Russia-Ukraine conflict. PHP will await the results of today’s Presidential, vice presidential, and general elections. CZK will await industrial output data, TWD a trade balance print and MXN a CPI print. We remind that HKD and RUB are on holiday today.

G10: AUD was the biggest loser at -1%, and faced a test of the psychological 0.7000 support. Other high beta currencies were close behind in losses, with NZD -0.98%, NOK -0.7% and CAD -0.55%. CHF and JPY lost the least at -0.25% and -0.3% respectively

–EM currencies saw major losses as well. INR set a new record, breaking past the 77 handle and sitting -0.5% at 77.32. CNH was also of note, trading 0.45% lower on a stronger dollar, despite a stronger than expected yuan fixing was set for the fifth consecutive day.

–CE3 currencies were down over 0.5% as well, while risk proxy ZAR was down 0.8%

Equities continued their decline seen on Friday, with both S&P eminis (-1%) and Nasdaq100 futures (-0.9%) down. Asian equities saw Kospi down 1.14%, and Nikkei down 2.29%. Kospi in particular will be watched as in heads towards the lowest close since November 2020. HSI was closed due to a HK holiday.