North American Summary and Highlights 19 October
Overview - It was a quiet start to the week with the USD making marginal gains, led by USD/JPY.
North American session
In a quiet session the USD edged marginally higher, led by USD/JPY, which rise to 158.50 from 158.10. EUR/USD was little changed near 1.1210. EUR/GBP advanced to .8430 from .8420 while EUR/CHF edged up to .9270 from .9260.
The only US data was a weak October NAHB homebuilders’ index of 29 from 32, reaching its lowest since June 2012. Canadian CPI at 3.1% in September from 3.0% was softer than expected, with the Bank of Canada’s core rates slipping. USD/CAD advanced to 1.4110 from 1.4080. AUD/USD was little changed near .6980.
European session
Relatively contained start to the week, on the back of last week’s dollar led swings, though euro underperforms and remains weighed on the crosses. Large scale marches and riots in France at the weekend keep OATs and French CDS heavy. While positioning still props EUR/USD after last week’s overbought dollar pullback, EUR/GBP does still nudge a new low on the move into 0.84~ support and off on other crosses.
ECB Lagarde at w/e also notes that the bond selloff will slow inflation (“will slow growth and reduce pass-through by more than projected in our September exercise”), so also rather dovish. USD/JPY fairly flat just above 158. BoJ’s Ueda says underlying inflation 'quite close' to price goal. AUD outperforming on the day, on the back of firmer China activity data (GDP, retail…) and corrective out of recent underperformance and short positioning. Indonesia pressure out of MSCI (equities another -5%) remains an isolated factor.