- The USD was generally weaker through the European morning, losing ground against most currencies, although GBP/USD was net little changed on the morning with initial GBP gains against the EUR after the stronger than expected UK CPI data soon being reversed. Otherwise, the USD lost about 0.2% across the board, with EUR/USD rising from 1.1810 to 1.1830, and USD/JPY falling from 109.50 to 109.30. There was no obvious trigger for the softer USD, which looked like a resumption of the weaker tone that followed the U.S. CPI data on Tuesday.
- UK CPI was stronger than expected, with the core measure rising to 3.1% y/y in August from 1.9% in July. The rise was mainly due to base effects, but was nevertheless stronger than expected. EUR/GBP initially dipped to 0.8535 from around 0.8545 at the open, but quickly recovered to hit a high of 0.8555.
- The EUR was weak against the CHF and scandis. EUR/CHF dropped from 1.0860 to 1.0845, EUR/NOK fell to 10.21 to 10.13 and EUR/SEK fell to 10.14 from 10.17. The NOK gains were helped by the Norges Bank quarterly survey of business sentiment. The survey showed Norwegian business sector activity has increased substantially during the past three months and will continue to expand during the next half year, though capacity constraints are now growing. This will provide further support to the hawkish outlook for Norges Bank policy, with a hike expected next week and three more anticipated in 2022.
- The USD in Asia session remained a touch heavy from yesterday’s weaker-than-expected US CPI data. USDJPY especially was hit hard while EUR and GBP gained modestly. U.S. Treasury 10yr note yield eased to 1.276%, also a key factor for USD weakness. Bearish theme remains intact for the coming sessions. Investors eye on U.S. industrial production data; expected ease from 0.9% to 0.5% could offer more USD weakness. Looking ahead, Thursday’s retail sales would attract interest, along with U.S. stimulus, COVID and geopolitics.
- USDJPY looks fairly muted in Asia hours, holding well into yesterday’s low at 109.53 and support at 109.41. Currently, Yen retains safe-haven appeal amid optimism induced after report that Japan is on track to reach the vaccination levels of the U.S. and Europe.
- China’s industrial production was weaker-than-expected 5.3% y/y print (vs 5.8% expected) and new home sales printed 0.2% gain (prior +0.3%) helped to underpin Yen.
- AUD remains pressured after the heaviest daily fall in the week. Expect more weakness multi-session despite a softer greenback outlook. FX participants have been selling AUD and its crosses; JPY, NZD, CAD and even vs the SGD. Westpac Sept consumer confidence index gained 2.0% m/m had no impact.
AU: Westpac Consumer Confidence (Sep) 2.0% (Prev: -4.4%)
JP: METI Tertiary activity index (Jul) (Mkt: 0.3% Prev: 2.3%)
UK: CPI YoY (Aug) 3.2% (Mkt: 2.9% Prev: 2%)
UK: CPI MoM (Aug) 0.7% (Mkt: 0.5% Prev: 0%)
NO: Trade Balance (Aug) 42.6Bn (Prev: 42.2Bn)
EU: Industrial production (Jul) 7.7% (Mkt: 6% Prev: 9.7%)
Still to be released
12:30 GMT - CA: CPI y/y (Aug) 4cast: 3.9% (Mkt: 3.9% Prev: 3.7%)
12:30 GMT - CA: CPI m/m (Aug) 4cast: 0.1% (Mkt: 0.1% Prev: 0.6%)
12:30 GMT - US: Empire State Survey (Sep) (Mkt: 18 Prev: 18.3)
12:30 GMT - US: Import Price Index (Aug) (Mkt: 0.2% Prev: 0.3%)
13:00 GMT - CA: Existing Home Sales (Aug) (Prev: -3.5%)
13:15 GMT - US: Industrial production (Aug) 4cast: 0.1% (Mkt: 0.5% Prev: 0.9%)
13:15 GMT - US: Capacity Utilization (Aug) 4cast: 76.2% (Mkt: 76.4% Prev: 76.1%)
14:30 GMT - US: DOE U.S. crude oil inventory (Sep 10) (Mkt: -3574K Prev: -1528K)
22:45 GMT - NZ: GDP YoY (2Q) (Mkt: 16.1% Prev: 2.4%)
22:45 GMT - NZ: GDP SA QoQ (2Q) (Mkt: 1.1% Prev: 1.6%)
23:50 GMT - JP: Trade Balance (SA) (Aug) (Mkt: 96.5Bn Prev: 52.7Bn)
23:50 GMT - JP: Imports (Aug) (Mkt: 40% Prev: 28.5%)
23:50 GMT - JP: Exports (Aug) (Mkt: 34.1% Prev: 37%)
23:50 GMT - JP: Trade Balance (NSA) (Aug) (Mkt: 6.5Bn Prev: 441Bn)
No Significant Events