Europe Summary and Highlights 2 October

European morning session

USD/JPY gained around half a figure through the European morning session, helped by comments from BoJ governor Ueda who said that markets were still unstable – seen as code for indicating that BoJ policy would remain accommodative for the time being. However, Ueda also said that FX moves were having an increasing impact on inflation, suggesting that significant JPY losses might lead to tighter policy, while JPY gains could prevent early BoJ tightening.

Otherwise, the USD as generally not much changed, but there were some modest gains for the scandis, with EUR/NOK dropping around 5 figures and EUR/SEK around 2 figures, while EUR/CHF edged up around 20 pips to 0.9375. But although the JPY and CHF were weaker, equities continued to edge lower and the oil price continued to edge higher.

North American session

Ahead of the US data, a statement by the US that Iran was preparing to launch a missile attack against Israel lifted oil and pressured equities. The US data saw surprisingly strong job openings, up 329k to 8.04m in August. September’s ISM manufacturing index was unchanged at 47.2. However reaction to the data was limited with focus on the Middle East.  Midday saw Iran launching a missile attack. Damage from the attacks seems to have been limited though Israel stated there would be consequences for Iran.

USD/JPY fell from near 144 to touch 143 but subsequently recovered and remained within that range even after the missile attack, settling near 143.60. EUR/USD ended only slightly weaker near 1.07 after briefly touching below 1.05. GBP/USD fell below 1.33, lifting EUR/GBP to .8335 from .8315. EUR/CHF ended lower near .9365 but off lows below .9340. AUD/USD slipped but ended only slightly below .69, off the lows. With USD/CAD falling below 1.35 as oil picked up AUD/CAD fell to .93.