North American Summary and Highlights 23 Sep
Overview - The USD was slightly weaker, though held up better against the riskier currencies, after Fed’s Powell warned that there were no risk-free policy choices.
North American session
Most eyes were on a speech from Fed’s Powell, who stated that with risks on both sides of the mandate there was no risk-free path for policy. There was little initial reaction but equities struggled. USD/JPY, which had previously recovered to 147.90 slipped back to near 147.50, while EUR/USD advanced to 1.1815 from 1.1790. The riskier currencies saw little movement, with USD/CAD slightly higher near 1.3850.
Ahead of Powell September’s S and P PMIs slipped, manufacturing to 52.0 from 53.0 and services to 53.9 from 54.5, but being far from weak generated little response. Fed’s Goolsbee and Bostic sounded cautious about easing but Bowman was dovish, warning the Fed was at risk of falling behind the curve.
European morning session
The USD traded lower against the JPY through the European morning, dropping 20 pips to 147.60, and against the AUD, with AUD/USD rising 15 pips to 0.6605, but only edged very slightly lower against the EUR, which pushed up just above 1.18. EUR/USD dipped early on in response to weaker than expected French PMI data, but stronger German PMI data reversed the downmove.
EUR/GBP moved lower in early trading, opening at 0.8735 but trading down to 0.8720 ahead of the UK PMI data, but the weaker than expected outcome triggered a sharp rise back to 0.8740 by the end of the morning.
EUR/SEK initially traded slightly higher when the Riksbank announced a 25bp rate cut, as a cut had only been around 35% priced in. But EUR/SEK traded lower after that through the morning, finishing the session 5 figures lower at 10.99. The Riksbank’s decision to cut was accompanied by an indication that this was seen to be the last cut, and with the first rate hike projected near the end of 2026 this was seen as SEK positive.