North American Summary and Highlights 1 October

North American session

The USD was generally firmer guided by gains in oil, though UST yields were marginally softer. Jefferson, saying the Fed may take more time to decide its next move, was the most significant of several Fed speakers. Data showed initial claims, -1k to 197k, and continued claims, -11k to 1.701m very low. September’s ISM manufacturing index was almost unchanged at 54.5 from 54.6 but prices pad bounced tio77.9 from 77.1. August construction spending was stronger than expected with a rise of 0.9%.

USD/JPY slipped to 157.50 but recovered to 158. EUR/USD slipped to 1.1250 from 1.13. EUR/GBP fell to 0.8520 from 0.8540 while EUR/CHF fell sharply to .9340 from .9440. Moves in AUD/USD and USD/CAD were modest though AUD/CAD fell to 0.9860 from .99.

European session

Dollar still in the ascendancy across the board. USD/JPY in particular bounces back after the yen buying into the period-end yesterday. Expiries up at 158.25 today also magnetic on the rebound. Dollar squeeze also being felt out in some EM popular carry types too, USD/MXN up a further 0.8% in a retracement move gathering some steam, USD/ZAR likewise up 0.9%.

Volatility still showing up most in bonds, with the MOVE index up around the March highs, tending to support the dollar action. EUR/USD also extends the selloff, testing through 1.280 support, with the bigger support further down at 1.12. French spreads continue to blow out and could increasingly become a specific euro negative factor.

USD/CHF does find resistance at 0.84 offering some capping after an overbought run, early highs of 0.8380s. Swiss CPI as expected at a low flat mth/mth, yr/yr to 1% from 0.8% on base effects.