North American Summary and Highlights 21 Nov
Overview - USD/JPY moved lower in Europe, though the USD was little changed in North America, despite taking a hit as Fed’s Williams lifted hopes for a December easing.
North American session
The USD saw some early gains but these were reversed when Fed’s Williams said he still saw room for a near term rate cut. These remarks sent UST yields lower, though yields moved off their lows later in the session, noting strength in equities, supported by Williams’ remarks and lower oil prices as hopes built for an end to the war in Ukraine.
USD/JPY saw moderate losses to 156.40 from 156.85 while EUR/USD gains were marginal, to 1.1510 from 1.51. GBP/USD saw stronger gains as EUR/GBP slipped to .8785 from .8820, contrasting a rise in EUR/CHF to .93 from 9280. AUD and CAD saw mid-session losses but as equity gains built AUD/USD edged above .6450 while USD/CAD slipped back to around 1.41.
European morning session
USD/JPY dropped half a figure, EUR/USD lost 20 pips and AUD/USD lost 15 pips through the European morning. GBP and CHF were unchanged against the EUR, but scandis were lower, with EUR/SEK and EUR/NOK both gaining around 3 figures.
JPY strength looked to be a continuation of the correction seen in Asia which was triggered by the sell-off in equities on Thursday and he comments from Finance minister Katayama in early Asia specifically threatening intervention. Equities bounced a little in Europe but the FX risk tone remained negative.
The morning saw preliminary November PMI data for the Eurozone and the UK. The Eurozone composite PMI was slightly weaker than expected, but the UK PMI fell more significantly due to weakness in services. UK retail sales for October were also weaker than expected, falling 1.1% m/m, but despite an initial dip in GBP, EUR/GBP was unchanged on the morning.