North American Summary and Highlights 19 May
Overview - The USD remained firm supported by higher UST yields as Middle East risks persisted.
North American session
The USD remained bid with Trump stating he may need to hit Iran gains, as were UST yields, though both saw a modest afternoon correction from the highs. USD/JPY stabilized near 159 while EUR/USD found support below 1.16. EUR/GBP stabilized near .8660 as GBP/USD found support below 1.34. April US pending home sales were on the firm side of expectations, up by 1.4%, a third straight rise.
April Canadian CPI picked up to 2.8% yr/yr from 2.4% on an energy price rise in the month and an energy price drop a year ago, due to the abolition of the carbon tax, dropping put. However the data was softer than expected with the BoC’s core rates slowing. A bounce in USD/CAD on the data was however not sustained, with USD/CAD little changed near 1.3650. AUD/USD found support below .71.
European session
Still a very nervy market following a period of noisy and erratic Iran commentary. That, and an equally uncertain risk tone after recent heated tech gains propped (next focus here Nvidia earnings), tending to keep the dollar propped.
Most pairs sitting within their recent consolidative areas, if proving heavy into bounces at present: EUR/USD sitting off 1.16- support, AUD/USD just off 0.71- support, while USD/JPY continues its slow creep back towards intervention areas, with a high so far of 159.17. Japan FinMin Satsuki Katayama at G7 repeats that ready to act appropriately against excessive currency volatility.
The UK saw soft labour market data reinforced the need for BoE caution, with notable weakness in vacancies and the (albeit noisy and subject to revision) payrolls data at -100k, weakest since pandemic. Unemployment back to 5% in the 3mths to March, and while average earnings was slightly above expectations at 4.1% from 3.9%, regular pay dropped to 3.4% from 3.6% ex-bonus in line with expectations.
EUR/GBP consolidates its correction seen yesterday on the reports that Burnham would not overhaul the fiscal rules – still very much mid ground within the wider 2026 range - while gilt yields -3/4bp across the curve, following yesterday’s relief/position trimming move.