North American Summary and Highlights 18 September

North American session

The USD largely erased European gains in North America settling little changed on the day. Oil prices erased earlier gains while August US industrial production was weaker than expected, unchanged overall with a 0.3% decline for manufacturing.

USD/JPY fell back to 156.70 from highs near 158. EUR/USD returned to 1.1480 after slipping to 1.1460. EUR/GBP however slipped to .8575 from .8590 as GBP/USD more than fully reversed earlier losses, getting close to 1.34. EUR/CHF also slipped, to .9440 from .9460. USD/CAD failed to hold above 1.40 while AUD/USD was little changed on the day near .7125.

European session

Very much all about the BoJ in Asia and the European morning. As had seemed the risk, it proved a ‘sell the fact’ for the yen out of the expected hike that lacked enough explicit hawkishness to validate and give confidence in the market’s more hawkish pricing trajectory. The 7-2 vote, with 2 dissents for no change and no votes for more, also went with the grain.

USD/JPY lifted to 157+ out of the decision and statement, eased back on some of the initial press conference comments regarding inflation risks and remaining accommodation, before then extending further on the lack of urgency and follow through signalling. Ueda in particular noted a desire to see if CPI stabilised at 2% into the fiscal year end and also to see spring wage round. The 'non-hawkish-hike' encouraged supply to step back, and the move has extended towards the next resistance level up at 158.

Largely consolidation elsewhere. Oil still easing off its week’s high, -$1 or so.