North American Summary and Highlights 27 September

North American session

US core PCE price data was weaker than expected with a rise of 0.1%, as were 0.2% gains in personal income and spending, though a narrower advance goods trade deficit of $94.3bn from $102.8bn gave support to Q3 GDP estimates.  The USD slipped on the data, and USD/JPY drifted steadily lower to 142.10, while USD/CHF fell to near .84, but elsewhere USD losses struggled to hold. 

After briefly touching 1.12 EUR/USD ended little changed near 1.1165, with EUR/CHF falling below .84. EUR/GBP had little direction. AUD/USD was marginally firmer above .69 but USD/CAD, after a brief dip on the data, which included an above consensus 0.2% increase in July Canadian GDP, advanced to 1.3515 from around 1.3475. Canadian GDP still looks set to underperform BoC forecasts in Q3.

European morning session

USD/JPY fell sharply early in the European morning, triggered by the election of Ishiba as the new LDP head and PM. There had been concerns that Takaichi, who is opposed to BoJ tightening, might win the election, but the Ishiba victory keeps the BoJ on a tightening course, although Ishiba also said he will ensure Japan emerges from deflation, so will not be overpassing the tightening agenda. USD/JPY reached a high of 146.50 in late Asia on the Takaichi concerns, but fell to a low of 142.78 in Europe on the Ishiba election, bouncing modestly to settle just above 143. 

EUR/USD was net not much changed near 1.1160, but did see a dip on weaker than expected French and Spanish CPI data which increased expectations of ECB October tightening and took it down to 1.1125 mid-session. Most of the other Eurozone data came in close to expectations, with German unemployment steady at 6.0% and the European Commission survey showing some further modest weakness in the business climate.

Most other pairs were not much changed on the session, but the CHF rallied with the JPY, with EUR/CHF falling from 0.9480 to 0.9420.