North American Summary and Highlights 30 October

North American session

The USD saw a bounce on a much stronger than expected 233k rise in October’s ADP employment report, but there was little response to a slightly below consensus 2.8% rise in Q3 GDP with a slightly above consensus 2.2% rise in core PCE prices. The Treasury refunding left auction sizes unchanged.  Soon after October German CPI inflation came in stronger than expected, with HICP at 2.4% yr/yr, up from 1.8% in September.

USD/JPY peaked near 153.50 and ended near 153.35 after slipping back below 153. EUR/USD found support near 1.08 before building gains to 1.0860. EUR/JPY rose above 166.50 from 165.50, and EUR/GBP extended gains above .8370 from .8350 after a brief dip to .8320. The UK budget, which delivered a fiscal boost despite hikes in taxes, did not generate a significant reaction. AUD/USD was stable but with oil firmer USD/CAD slipped below 1.39.

European morning session

The USD and GBP were softer through the European morning, while the EUR, JPY and AUD gained ground. EUR/USD rose around 20 pips to 1.0840, touching a high at 1.0860, helped by stronger than expected GDP data from the Eurozone. This showed a rise of 0.4% in Q3 against a market consensus of 0.2%. Additionally, German October state CPIs generally came in well above expectations, with Spanish CPI also on the firm side. The result was a significant rise in front end EUR yields. The EUR also gained ground against the CHF, reaching 0.94.

USD/JPY fell back 40 pips while the AUD was the best performer, gaining 35 pips or more than 0.5% on the morning. GBP was weak, with EUR/GBP gaining 30 pips to 0.8350 ahead of the UK budget statement due later. The SEK continued to soften, with EUR/SEK rising around 3 figures to 11.5450.