North American Summary and Highlights 4 Apr

North American session

The USD saw a volatile North American session, particularly late in the session on talk of a potential near term Iranian attack on Israel. This hit stocks and UST yields, the UST move led by the front end despite the day’s Fed speak having been somewhat hawkish, particularly Kashkari who said the Fed might not ease this year, while others cautioned about recent strong data and the need for caution over easing. 

USD/JPY fell by over 50 pips below 151.20 but risk off trading saw USD/CAD bounce from around 1.35, already off its lows, to above 1.3550, while AUD/USD slipped back to .6585 from highs near .6620. 

EUR/USD and GBP/USD more than fully reversed modest early gains triggered by US data, when initial claims rose to 221k from 212k and the trade deficit increased to $68.9bn in February from $67.6bn in January.  EUR/CHF erased gains seen after the Swiss CPI while USD/CHF completed a reversal of its earlier gains.

European morning session

Riskier currencies continued to make gains against the USD, JPY and CHF through the European morning session. AUD/USD traded up around 20 pips to above 0.66 for the first time since March 21st, while EUR/USD also gained around 20 pips to 1.0860. GBP underperformed slightly, with EUR/GBP gaining 5 pips to 0.8575. USD/JPY was marginally firmer at 151.75, but the CHF was the weakest currency, with EUR/CHF gaining 40 pips to 0.9840 after weaker than expected Swiss CPI data. 

Swiss CPI came in at flat on the month and 1.0% y/y in March, down from 1.2% in February and well below the 1.3% expected. Swiss 2 year yields fell a further 5bps, underpinning the CHF decline. 

The only other data was Swedish services PMI, which came in stronger than expected at 53.9, its highest since November 2022. EUR/SEK traded around 2 figures lower through the morning to 11.5050.