North American Summary and Highlights 25 September
Overview - EUR/JPY again advanced in Europe, but the USD was stronger in North America after US new home sales exceeded expectations.
North American session
The USD saw some modest slippage early in North America, with EUR/USD moving above 1.12 and GBP/USD moving above 1.34, but after a stronger than expected US new home sales report the USD gradually built momentum. While sales fell by 4.7%, to 716k, this followed a 10.4% July rise that was revised to 751k from 739k, making it the strongest month since February 2022.
EUR/USD fell to 1.1130 and GBP/USD fell to 1.3315. USD/CAD rose to 1.3480 from 1.3440 and AUD/USD fell to .6820 from .6870. USD/JPY advanced modestly from European highs to 144.70. EUR/JPY saw a modest correction from early highs above 161.50 to 161 while EUR/CHF after reaching .95 fell back to .9460.
European morning session
The USD was generally firmer through the European morning, particularly against the JPY with EUR/JPY making a new high for the month at 161.29. USD/JPY gained 90 pips to 144.20 while EUR/USD fell only modestly, losing around 10 pips from an open just below 1.12. GBP fell more sharply, with EUR/GBP up 20 pips from an open below 0.8350, and GBP/USD consequently losing 40 pips to 1.3370. GBP weakness followed comments from MPC hawk Megan Greene who suggested gradual easing was on the cards, even though UK yields were little changed. USD/CHF also rose strongly gaining 70 pips to 0.8490, with EUR/CHF showing similar strength.
The main news of the morning was the Riksbank monetary policy decision, which produced the expected 25bp rate cut but a much more dovish projection, with the Riksbank suggesting a possibility that there could be a 50bp cut at one of the two remaining meetings this year. Nevertheless, Swedish yields were little changed beyond the very short end, and EUR/SEK was also not much changed.