North American Summary and Highlights 12 November
Overview - The USD advanced further as rising oil prices added to inflation concerns.
North American session
The USD gained further strength without any dramatic moves. Data was on the soft side with initial claims rising 9k to 200k and October existing sales falling 5.5% to a 16-year low of 3.75m. Comments from Fed’s Hammack and Daly saw further tightening, but did not imply any aggressive moves. More significant was Trump stating that he did not need a deal with Iran, lifting oil prices and UST yields significantly. Iran in the afternoon stated that it had been attacked.
USD/JPY continued to face resistance at 160 but EUR/USD fell from 1.11 to 1.105. Moves in EUR/GBP and EUR/CHF were modest. AUD/USD was weaker but found support at 0.68. USD/CAD was little changed after reversing an early dip.
European session
The dollar remains solid, though backing off a little having reached some natural take-a-breather levels across a number of pairs. USD/JPY in particular tested into 160, a few pips short, before backing off. Mimura returned with verbal intervention for the first time in a while, calling recent moves too rapid and warning it was too early to forget what happened in the summer (re: joint intervention). That’s tending to reinforce some justified caution and speed bumps on the run up to these levels, alongside natural supply waiting at this region that had previously shown some appetite to drip feed in on tests.
UK GDP comes in as expected at the still robust 0.7% pace, no surprise but maintaining the resilience that drove BoE upgrades. Sep alone also maintains a better pace at 0.2% in the month (mkt flat), with services 0.2%, IP 0.3% and even construction bouncing, 0.8%, with Sep y/y up to 2.1%. While at the margin supportive, no real impact with dollar-driven trade dominating. Cable slowing a little into 1.3250 congestion.
Having initially tried to brush it off on the bounce, tech sentiment a little more pressured again by the Nvidia woes, given its ‘hero’ stock and central node status in the web of interconnected demand and finance deals across the big operators. Nvidia was off 5-10%, with Nasdaq off around ½ to ¾ %. Slight drag on AUD.