Europe Summary and Highlights 1 October

European morning session

EUR/USD slipped lower through the European morning, losing nearly half a figure from an open near 1.1140. The decline was mirrored in the other risky currencies, with AUD/USD down 20 pips to 0.6910, with EUR/GBP steady at 0.8325. The JPY went the other way, with USD/JPY down 70 pips to 143.70, while EUR/CHF slipped 40 pips to 0.9390. These FX moves reflected a risk negative tone, and yields were generally slightly lower, although equities only fell very modestly. 

Newswise, the Eurozone CPI data came in in line with the published median of 1.8% headline, 2.7% core. Eurozone manufacturing PMI was revised marginally higher, but remained at very weak levels. Otherwise there was little of note.

North American session

Early focus was on comments from ECB’s Lagarde, which were generally dovish and saw no pushback against market expectations for an October easing. EUR/USD slipped below 1.1150, fully reversing earlier gains. EUR/GBP fell below .8320 though EUR/CHF held above .84, only partially reversing earlier gains. USD/JPY continued to push higher, extending gains above 143.

In the afternoon the USD was lifted by less than dovish comments from Fed’s Powell, who stated policy was intended to keep the economy solid and the Fed was not in a hurry to cut quickly. USD/JPY extended gains to 143.80 while EUR/USD losses extended to 1.1130. Other currencies, including the previously relatively stable AUD, CAD and GBP also slipped, with EUR/GBP seeing a modest correction off the lows, though AUD/USD found support at .69.