North American Summary and Highlights 18 June
Overview - The USD remained bid on Friday. The SNB and BoE delivered no surprises.
North American session
The bid in the USD extended further in North America, led by USD/JPY which after breaking through 161 saw a spike to 161.75 before correcting below 161.50. Moves in EUR/USD were modest, but the pair was heavy near 1.1450. AUD/USD was also quite subdued, holding above .70, while USD/CAD saw modest gains touching 1.4140 from 1.4120.
The BoE delivered an expected 7-2 vote for unchanged policy generating little response, though later EUR/GBP advanced to .8680 from near .8660. EUR/CHF saw similarly modest gains. US data was in line with expectations, initial claims at 226k from 230k and June’s Philly Fed at 10.3 from -0.4, both improved and doing nothing to undermine the USD, but not as strong as some preceding releases.
European session
While overnight saw a little ‘backfilling’ on the FOMC bond and FX reactions, as the market consolidated, the European morning saw the dollar back bid as it approached the NY session, with bonds also back offered.
EUR/USD as low as 1.1460~ running towards the .40/10 lows. Cable following through towards 1.32~. USD/NOK also still trend-up and furthering its run towards 9.8 (current high of 9.6825). USD/JPY despite the speed-limits continues to leak out and hitting new YTD highs at 160.90. Still a focus on MoF choices to deal with this USD-driven price action.
No surprises from the SNB with forecasts little changed and only the usual mild references to CHF strength. Norges Bank left policy left unchanged and reiterating that it sees somewhat tighter monetary stance will be needed to bring inflation down with inflationary pressures somewhat stronger than expected, such that it will likely be necessary to raise the policy rate at one of the forthcoming meetings. NOK however still driven by USD action and the ongoing oil/ToT trade unwinds.
UK labour market data sees unemployment dropping below 5% (4.9% vs mkt 5%), earnings holding at 3.4% (mkt 3.2%), and tax-based workers on payrolls rising 2k with the prior month tempered, revised to -53k from -100k. Focus turning to BoE and then the by-election, but as elsewhere current price action is dollar-led.