North American Summary and Highlights 31 July
Overview - The USD saw some recovery but fell to new lows in North America.
North American session
The USD extended its recovery early but slipped later in the session and hitting new lows in the afternoon. USD/JPY fell below 158.50, in part on source stories on Reuters before correcting to near 159. EUR/USD fully reversed a move below 1.15. EUR/CHF was firmer near .9320 while EUR/GBP was little changed but off the day’s low. After a brief dip below .70 AUD/USD returned to .7040. USD/CAD could not sustain a move back above 1.4050 but held above 1.40.
The US Q2 employment cost index at 0.9% was on the firm side of expectations while the final July Michigan CSI saw a modest upward revision, but inflation views were unrevised. Fed’s Hammack, Kashkari and Logan explained their hawkish dissents and non-voter Barkin said it was a close call if rates were high enough. May Canadian GDP exceeded expectations with a 0.3% increase.
European session
Dollar slightly supported by USD/JPY’s modest post intervention drift up, though the latter has faded and the pair up only around 0.2% now.
BoJ Ueda’s press conference was a little hawkish, with comments such as ‘will hold careful discussions at next meeting onwards with risks of inflation overshooting more than in past in mind’. Seen as slightly increasing risks of a move in Sep vs Oct, with Sep odds now up to more than ¼.
EUR/USD tending to stay fairly tight to particularly large 1.15 expires today. EZ HICP 2.9%y/y from 2.8%, in line with expectations. France Jul HICP 2.4% from 2% (mkt 2.1%).