USD: ""The dollar is our currency, but it's your problem

FXDaily 07:13CET 12October2022 https://research.ca-cib.com UsD:"Thedollarisourcurrency,butit'syourproblem... Asiaovernight DuringAsia,anFTreportsayingtheBoEcouldextenditsGiltbuyingprogramme ValentinMarinov HeadofG10FXStrategy beyond14OctoberifmarketconditionsnecessitateitprovidedtheGBPandrisk+442072145289 wo0.qo-e9g4oujewrugu9e higher,sotoowasamodestmajorityof_Asianbourses.,TheGBPwastheoutperformerinG10FXinAsiawhiletheAUDandJPYweretheunderperformers. DavidForrester AdovishRBAspeechandweakironorepricesweighedontheAUD.TheabsenceSeniorFXStrategist +85228261529 ofBoJFXinterventioneventhoughUSD/JPYralliedabove146weighedonthe JPYdavid.foester@ce-cib.com USD:"Thedollarisourcurrency,butit'syourproblem..." AheadofthemeetingoftheG20financeministersandcentralbankgovernors AlexandreDolci FXStrategist +442072145064 todayandtomorrowinWashingtonDC,FXinvestorshavebeenspeculatingabout alessncre.dolci@ca-cb.com theprospectsforaconcertedinterventiontoweakentheUSDacrosstheboard. ThemainargumentbroughtforwardinfavourofapotentialPlazaAccord2.0isthe thereforetheglobalgrowthoutlook,Indeed,recentlytheBoJhadtointervenetostabiliseUSD/JPYwhilecentralbanksliketheECBhadtohikemoreaggressivelytostabilisetheirowncurrencies.Lastbutnotleast,GBP/USDcollapsedtoanall- timelowamidstgiltmarketturmoillastweek.Anotherreasonforaconcertedaction Indeed,thecentralbanksthatintervenetodefendtheircurrenciesvstheUSDtendtosellUSfixedincomesecuritiesandthusboosttheUSDrateadvantage.ThestrongUSDandgrowingfundingcostshavemadetheservicingofUSDdebtmore 10OctFXPositioning:shorEUR/USD& AUDUSDlongNZDUSDandUSDPY 07OctFXWeekly:USD:Plazadiscord 06OctFXVolatityMonitor:Intenvention afermath 05OctFXFocus:GBP:fear,FEERand aBEER expensive.AccordingtothelatestBISdata,thetotalamountofUSDcredittonon-vsUSD) bankborrowersoutsideoftheUShasgrownby3%YoYtomorethanUSD13trn sespeeidsdessiseqouenossounjobuuepmdieseorpeseysnJo wellasFRA-OISspreadsoflate WeworrythatthemeetingsinWashingtonwillhighlightthelingeringdiscordamongG20financeministersandcentralbankers,withtheUSinparticularsillopposedtoanymeasurestocheapentheUSDandadoptingastancethatcanbesummarisedwiththefamousquoteofUSTreasurySecretaryJohnConnallyfrom alsothinkthattheupdatedG20communiquemaymakeamoreexplicitreferenceAUD totherecentUSDappreciationandevenallowindividualmemberstatessomewhatAdr CAD SEK NOK CHF ■NZD EUR GBP 0.4-0.20.20.4 fromherelesscertainandthuscanfuelFXvolatility.So1urcMe:Bloombevo,CreolirAgricoleC/B mpliedvolatilitydailychange(net, JPY:problemswiththeUSD USD/JPYhassurpassedinterventionlevelsandbrokenthrough146inatestto theMoF'sresolvetoholdtheline.Intermsoftechnicalresistance,thereisnotmuchinthewayoffurtherUSD/JPYstrengthuntilthe1998AsianFinancialCrisis GBP JPY highof147.66.ThereisalsolikelylittlehelpfortheJPYonthemacroeconomicNZD frontinthecomingday(s).TheFOMCMinuteslatertodayarelikelytopointtotheSEK rampingoftheFOMC'shawkishnessanddotplots.USCPIdataonThursdaywillNOK likelydemonstratefurtherstickinessininflation,And,theG2Omeetingoffinance ministerandcentralbankersinWashingtontodayandThursdayisunlikelyseetheUSbendonitsstrongUSDpolicy.Therehasbeensomeverbalinterventionto AUDCHF supporttheJPYwithFinanceMinisterShun'ichiSuzukisayingheiswatchingFXEUR moveswithasenseofurgency.ChiefCabinetSecretaryHirokazuMatsunohasCAD 00.20.40.6 moves.Theverbalinterventionssofarareratinga6outof7onourintervention scale(7beingwarningofimminentintervention).Indeed,BoJGovernorHaruhikoSource:Bloomberg,CreditAgricoleCIB CREDITAGRICOLE1 FXDaily12October2022(07:13CET) KurodahaspreviouslydefinedexcessiveFXmovesastwotothreeJPYperdayandwearesofarwellshortofthatlevelofvolatility.Yesterday,JPYCzarandViceFinanceMinisterforInternationalAffairsMasatoKandasaidhecouldinterveneintheairandonthewaytoWashingtonifneeded,buttherearefewsignsofthatsofar.AttheheartofthematteriswhetherornottheMoFwilldefendthe146line andsointervenesoonortakeasniperapproachtointerventionandsaveitsbulletstotacticallypickoffinvestorsthatgetlongUSD/JPY.WeestimatetheMoFhasaboutUSD120-130bntouseforinterventionbeforeithastostartsellingUSTsandsoithasanotherfivetosixshotsiftheyinterveneattheUSD2Obnrateitdidon22 USD/JPY'sshort-termfairvaluetobe149.33;sowhereitshouldbeintheabsenceofBoJintervention, GBP:growth,growth,growthintoquestion appetiteswungquitewildly.ThelatestUKjobsreportonbalancelookedsolidalthoughwagesgrowthcontinuedtolagbehindinflation.TheBoEtookfurtheractiontosupportUKbondsmarkets,whileUKpensionsaskedforanextensionof thisemergencybackstop.DuringhishearingbeforeUKMPs,UKChancellorKwasi TodaythatwillbetheturnofUKPMLizTrusstofacequestionsfromMPsforthe firsttimeinmorethanamonth,althoughsheisalsounlikelytobringanyfreshfoodforthoughtonconcretestepsonhowhergovernmentintendstoreviveUKgrowth. Indeed,thelatestUKGDPfiguresdueoutearlierthismorningaresettoshowthat activitystagnatedacrosstheeconornyoverthesurmmer,whilethemarketcould alsocloselymonitorthattheUKtradebalancedidnotdeterioratetoodramaticallyinthemeantime.SuchaneventualityshouldnonethelessnotgiveanysubstantialrelieftotheGBPwhichcou