North American Summary and Highlights 16 October
Overview - A weaker GDP was the main story after UK CPI came in below consensus. The USD was mostly firmer, though USD/CAD was an exception.
North American session
In a session with little news the USD was generally stronger, despite limited movement in UST yields. EUR/USD found sellers at 1.09 and slipped to near 1.0850, but USD/JPY stabilized near 149.80 with no test of 150 seen. GBP/USD returned to European lows near 1.2980 as EUR/GBP consolidated around .8360. USD/CAD was an exception to a stronger USD picture, slipping from just below 1.38 to just above 1.3750. With AUD/USD slightly weaker AUD/CAD fell to .9170 from .9220.
European morning session
The USD was generally slightly softer through a generally fairly quiet European morning. GBP was the biggest mover, with EUR/GBP gaining 40 pips to 0.8370 after the UK September CPI data came in much weaker than expected at 1.7% y/y headline, 3.2% y/y core, both 0.2% below consensus. PPI data was also slightly weaker than expected, at -2.3% y/y for input and -0.7% y/y for output. UK 2 year yields dropped 10bps on the news as markets priced in a November BoE rate cut as now being better than a 90% chance.
GBP/USD dropped below 1.30 for the first time since August, but bounced back above this level by the end of the session. EUR/USD gained marginally to 1.0895, and USD/JPY slipped slightly to 149.25, but these moves were small. Equities and bond yields generally both edged a little lower.