North American Summary and Highlights 29 September
Overview - The USD saw some gains despite soft data but took a hit as Fed’s Williams raised some doubt over whether a further tightening would be seen in October.
North American session
The USD saw an early dip but recovered ahead of some soft data which had little impact. September consumer confidence plunged to 81.8 from 88.6 while August job openings fell by 256k. After the data failed to have an impact the USD saw renewed gains, but came off its high in the afternoon when Fed’s Williams said there was no urgency to move again after September’s rate hike. Other Fed speakers, Barr, Goolsbee and Musalem, remained hawkish. Equities were under pressure, despite slippage in oil.
USD/JPY found support near 157 and resistance near 157.70, before slipping back to 157.25. EUR/USD traded in a 40 tick range centered on 1.1340. EUR/GBP and EUR/CHF saw slight losses. AUD/USD was unable to sustain a move back above .70. USD/CAD found resistance near 1.42. Unchanged July Canadian GDP was as expected with a preliminary August estimate for a 0.2% increase.
European session
RBA delivered the expected hike and retained a conditional tightening bias (continue to do what it considers necessary to bring inflation sustainably back to target, including increasing the cash rate target further if needed). The market already had 1 ½ hikes priced in prior though, and Nov follow up hike odds actually ebbed a touch as Bullock struck a more balanced note. AUD sees a little ‘sell the fact’, with the grain of the heavy action prior, off around 30-40 ticks vs USD and NZD.
Dollar retains it broader bid tone across the board too, with technicals and momentum still supportive, even if stretched. EUR/USD extends -0.4% to 1.3330s, to close in on the 1.1324 low from June. US yields still at and around the highs across the curve. Squeeze/increasing profit-taking on USD/NOK also continues. USD/JPY retains some capping after Monday’s verbal intervention, keeping yen crosses towards the recent lows. Some focus on whether month end also sees some possible USD/JPY selling.
Spain flash HICP 5% from 4.6% vs mkt 4.9%. EZ economic sentiment 97.9 from 98.4 vs mkt 99.