North American Summary and Highlights 29 Jan

North American session

The USD lost ground in late trade after the U.S. Treasury released its borrowing estimates ahead of the forthcoming quarterly refunding. Q1’s estimate was cut to $760bn from a preliminary estimate of $816bn made three months ago while Q2 was seen as $202bn. UST yields, already lower, extended their decline while equities rose on the announcement.

The USD fell most against the JPY, by around 60 pips to 147.40, around half of the move coming ahead of the Treasury announcement, likely responding to generally lower yields across the board in Europe and the US. EUR/USD, after finding support near 1.08, rose to 1.0830. GBP/USD rose above 1.27 and AUD/USD rose above .66. 

Otherwise, EUR/SEK was a little lower, reversing the move up in the European morning, but there was no news of any note. AUD/NZD fell to 1.0770 from 1.0790 after RBNZ Chief Economist Conway said they still had a way to go to get inflation to the target midpoint. 

European morning session

The EUR and scandis were generally weaker in the European morning, while then USD was otherwise a little weaker. EUR/USD fell 30 pips to 1.0815, but EUR/JPY fell around 60 pips to trade close to 159.80, while EUR/CHF fell 40 pips to 0.9325. AUD and CAD also gained a little ground against the USD. AUD rising 10 pips to 0.66 and USD/CAD falling 10 pips to 1.3440. GBP/USD was little changed. 

EUR/SEK edged slightly higher after weaker than expected Swedish Q4 GDP data which showed a rise of 0.1% q/q against market consensus of a 0.3% gain, but finished the morning little changed, while EUR/NOK fell a couple of figures despite another weak credit indicator for December, hitting another post 1990s low of 3.4% y/y. 

The weakness of the EUR may reflect some impact on European risk sentiment from the drone strike at the weekend that killed three US soldiers in Jordan. Yields in the US and Europe were generally lower, but equities remained resilient.