EUR/USD, USD/JPY flows - Pause before payrolls; Japan CPI high, EZ seen likewise

Some steadying after a wide day yesterday, dollar easing off only a fraction, heading into the next key payrolls release. EUR/USD slump came pretty close to tagging the big 1.12 level (low of 1.1214) amplified by the spike in attention on France, and settling half a figure off there now.

US10s back to just below 5 ¼ % after spiking to 5.34~ yesterday. Brent also settling just above $100 on the front month after jumping $4 late yesterday on the reports the US sending more navel assets to the Middle East.

USD/JY manages to largely shrug off the firm CPI prints, if off 30 ticks, with Tokyo Sept Core CPI YY 2.7% from 1.8%, vs mkt 1.8%, adding to the case for BoJ tightening given its focus on evidence on whether upside risks to target are materialising. The market has been very effective at sticking to expiry areas recent days and today’s biggest sit at 158, albeit with another large concentration at 157, making it a one figure battle for settlement.

Today sees both EZ HICP and then the US payrolls report. Consensus on the former had been 3.6% from 3.2% and 2.5% from 2.4%, but with national figures coming in high, the actual consensus is likely already higher than that. France and OAT performance is set to remain a running focal point too. 

For payrolls, we are close to market in looking around the 100k mark. Details like earnings will likely start to matter more too as the Fed focuses on inflation related evidence more and more, with the economy and labour market performing still strongly. Recent Fed comments (Jefferson following Williams) backing the need for more time and data and less urgency has seen Oct bets drop back to nearly 75% unchanged, with a Dec hike at 80-85%.