North American Summary and Highlights 16 Oct
Overview - The USD slipped, led by USD/JPY, as equities and UST yields fell on US banking sector concerns.
North American session
The USD slipped as equities took a tumble led by financials due to concerns over two regional banks, dragging UST yields and USD/JPY lower, the latter falling around a big figure to 150.30. EUR/USD advanced to near 1.17 from 1.1650. EUR/GBP edged above .87 but EUR/CHF slipped below .9270 after an early move above .93 as risk sentiment soured. AUD/USD saw modest losses below .65 but USD/CAD remained close to 1.4050.
Early comments from Fed’s Waller, backing a 25bps easing in October but expressing caution beyond that gave UST yields a brief lift that was more than fully erased later. US data saw a weaker Philly Fed manufacturing index of -12.8 from September’s strong 23.2, but less weakness in the detail. October’s NAHB homebuilder’s index bounced to 37 from 32 and the budget deficit showed a marginal dip in the fiscal year to September assisted by tariff revenues.
European morning session
There was a risk positive tone to European morning trading. The USD gained 30 pips against the JPY to 151.30, but lost ground to the AUD and GBP, with AUD/USD rising 15 pips to 0.6505 and GBP/USD up 25 pips to 1.3435. EUR/USD was little changed near 1.1655. EUR/CHF also moved around 10 pips higher to 0.9285.
The main news of the morning was the UK GDP data, which showed the expected 0.1% m/m gain in August, with the 3m/3m growth rate rising slightly to 0.3%. GBP initially slipped marginally lower on the numbers, but gained through the session, with EUR/GBP dropping to 0.8675 from 0.8695.