North American Summary and Highlights 3 October

North American session

There was not much FX movement in North America. A stronger ISM services index of 54.9 from 51.5 gave the USD a lift, but a bounce in USD/JPY above 147 was quickly reversed, and a more gradual dip in EUR/USD to 1.101 was largely reversed, again gradually. A modest rise in initial claims to 225k from 219k earlier had little impact.  EUR/GBP and EUR/CHF stabilised after advancing in Europe.

Oil spiked higher after Biden suggested an Israeli strike on Iranian oil facilities was being discussed, which did see a modest dip in USD/CAD, though USD/CAD ended marginally higher near 1.3550. 

European morning session

GBP saw the biggest move in the European morning, with EUR/GBP gaining 80 pips to 0.8410 after an interview with BoE governor Bailey in the Guardian newspaper. Bailey said there was a chance that the BoE could become "a bit more activist" and "a bit more aggressive" in its approach to lowering rates, if inflation news continued to be good. The JPY continued to weaken through the morning, following similar declines in the previous few session as Japanese officials represented a dovish policy stance. USD/JPY gained another 40 pips to 146.90. The CHF also weakened as Swiss September CPI data came in softer than expected at -0.3% m/m, 0.8% y/y. EUR/CHF finished the session 30 pips higher at 0.9400, having reached a high of 0.9422 mid-session. 

EUR/USD made modest gains, rising around 10 pips to 1.1035 helped by an upward revision in the Eurozone services and composite PMI, and stronger than expected PPI, which rose 0.6% in August. UK PMI was revised slightly lower.