Europe Summary and Highlights 16 October
The USD was generally slightly softer through a generally fairly quiet European morning.
European morning session
The USD was generally slightly softer through a generally fairly quiet European morning. GBP was the biggest mover, with EUR/GBP gaining 40 pips to 0.8370 after the UK September CPI data came in much weaker than expected at 1.7% y/y headline, 3.2% y/y core, both 0.2% below consensus. PPI data was also slightly weaker than expected, at -2.3% y/y for input and -0.7% y/y for output. UK 2 year yields dropped 10bps on the news as markets price din a November BoE rate cut as now being better than a 90% chance.
GBP/USD dropped below 1.30 for the first time since August, but bounced back above this level by the end of the session. EUR/USD gained marginally to 1.0895, and USD/JPY slipped slightly to 149.25, but these moves were small. Equities and bond yields generally both edged a little lower.
North America Session
The most significant data release came from a fall in Canadian CPI which saw USD/CAD bounce by 20 pips to 1.3840, but the BoC’s core rates failed to extend their downtrend and the bounce was later reversed and more, with USD/CAD falling below 1.38. The USD was generally slightly firmer on the session with EUR/USD moving back below 1.09 though USD/JPY was little changed around 149.20. GBP/USD slipped after touching 1.31 but EUR/GBP remained weaker near .8330.
US data saw a weak Empire State manufacturing index of -11.9 in October following a positive 11.5 reading in October. The New York Fed’s monthly survey showed consumer expectations unchanged at 3.00% for 1-year but with modest increases in the 3-year, to 2.66% from 2.54%, and 5-year, to 2.86% from 2.79%, views.