North American Summary and Highlights 14 Oct
Overview - The USD slipped in North America, more than fully erasing European gains, most of the losses coming before comments from Fed’s Powell. GBP weakened after labor market data.
North American session
The USD slipped in North America, most of the move coming before a speech from Fed’s Powell, in which he signaled the Fed may end the balance sheet runoff in coming months but added little on the Fed Funds outlook. Earlier comments from US Trade Rep Greer expressing optimism tensions with China could be overcome had assisted a recovery in equities from a weak start.
EUR/USD moved above 1.16 from around 1.1550. EUR/GBP remained firmer but GBP/USD retraced most of its European losses. USD/JPY slipped to 151.70 from 152.10. An AUD/USD recovery from a .6440 low could not quite reach .65. USD/CAD slipped to 1.4035 from 1.4080.
European morning session
The USD was generally firmer through the European morning. EUR/USD fell 30 pips to 1.1555, while USD/JPY rose 30 pips to 152.05. GBP was the weakest major currency, with EUR/GBP rising 25 pips to 0.8710 after the UK labour market data. Although the headline data was broadly as expected, with average earnings growth excluding bonuses up 4.7% y/y, weakness in private sector pay growth, a rise in the unemployment rate and a further modest decline in employment triggered GBP weakness.
Commodity currencies moved broadly in line with the EUR, but the NOK was the weakest currency on the morning, with EUR/NOK up 5 figures to 11.75. There was no obvious trigger for NOK weakness, but it was likely playing catch up with the weakness seen in the riskier currencies overnight.
The German ZEW survey was weaker than expected, with economic sentiment rising less than expected and the current conditions index the lowest since May.