North American Summary and Highlights 30 September

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.

European morning session

EUR/USD gained around 20 pips through the European morning, rising after the German CPI data came in weaker than the published median, though probably not as weak as expected after the very low French and Spanish CPI data last week. EUR/USD reached a high at 1.1209 before slipping back below 1.1190. EUR/GBP also rose a little, reaching 0.8350, although the gains came after the German CPI data rather than the downward revision to the UK Q2 GDP data seen early in the session. The EUR was also higher against the scandis and the CHF, with EUR/CHF rising around 50 pips to 0.9445 after trading below 0.94 overnight.

USD/JPY went the opposite way, rising around 80 pips to 142.60 after losing ground in Asia as the Japanese markets reacted to the appointment of Ishiba as the new PM, having been closed at the time of the announcement on Friday. AUD/USD slipped back from the highs above 0.6940 seen in Asia.