North American Summary and Highlights 28 October
Overview - The USD saw modest loses during Chairman Warsh’s press conference after the FOMC left rates unchanged. A Bank of Canada tightening has little impact.
North American session
The USD had a firm tone approaching the FOMC decision and made no response to the decision to hold policy steady. The USD did however dip during the press conference, as Chairman Warsh stated that progress was being made on inflation. Earlier in the session the Bank of Canada tightened by 25bps as expected, but stated they would be careful going forward. There was little reaction from USD/CAD. September’s advance USD goods trade deficit was wider than expected, at $134.9bn from $132.1bn.
USD/JPY advanced to 158.30 before correcting back to 158. EUR/USD saw highs above 1.1160. EUR/GBP and EUR/CHF were quiet. USD/CAD slipped to 1.40 from 1.4050, the move coming after the FOMC not the BoC meeting. There was little movement in AUD/CAD as AUD/USD rose to .7060 from .7035.
European session
Relatively subdued pre-FOMC Asia and European morning with the big exception of NZD. Cable does continue to lean a little lower into the UK Budget, as some recent longs pare back into the event risk.
Big mover the kiwi, though with NZD/USD spiking back down towards the mid Oct base before settling on 0.56~, while AUD/NZD up to fresh highs through 1.25. RBNZ split-decision hold was a big surprise with a hike largely priced in, even if Breman did highlight upward revision to OCR projection and upside risks discussed, along with NZD weakness.
On the flip side, Australian Q3 CPI does come in strong, if broadly as expected, at 1% trimmed mean (weighted a fraction lower). Hike probably for next meeting up at around 85%, and goes with the grain of the antipodean cross move on the session.