North American Summary and Highlights 15 May
Overview - The USD was firm supported by surging UST yields while equities came under pressure.
North American session
While there was not much movement, the USD remained firm through the US session as UST yields rose sharply and equities came under pressure. USD/JPY was slightly firmer around 158.70 and EUR/USD fairly stable near 1.1620. AUD/USD stabilized near .7150 while USD/CAD stayed close to 1.3750. Political uncertainty continued to weigh on the GBP, EUR/GBP supported at .87 and rising to .8725.
April US industrial production was stronger than expected, up 0.7% overall with manufacturing up by 0.6%, though half of the rise in manufacturing came from autos. This followed a May Empire State manufacturing survey that was stronger in both activity and prices.
European session
The last couple of sessions have seen both a more risk-off tone (correction of recent accelerating risk markets) and a dollar squeeze take hold in tandem and this extended over the European morning. Over stretched risk and commodity complex trades are suddenly finding the lack of Iran resolution, oil upside, US yield breaks higher, and the dollar upside taking out some levels, as challenging the overbought runs - thus feeding back into the stronger dollar tone.
Trump: losing patience on Iran, military destruction of Iran 'to be continued'.
Popular counters thus suffering on the day, AUD/USD off 1%+ and NOK (threatening a weekly outside reversal) likewise profit-taking and position trimming triggered even as Brent almost up $4.
On the back of the US moves and local news, gilts off 1.5pts back to the week’s lows. No10 indicates it will not stand in the way of Burnham standing in the by-election, opening the way for a challenge, though he does need to win what is a contested seat against a motivated Reform party to do so.
GBP/USD has seen a low of 1.3325, EUR/USD a low of 1.1617-, EUR/GBP as high as 0.8727- on initial cable leadership before levelling on the EUR/USD catch up.
Equities softer following overnight action, Dax off around 1 ½ %, back to the week lows.