North American Summary and Highlights 22 September
Overview - While the USD did take some lead from oil, the USD was slightly stronger while oil was softer.
North American session
The USD picked up through the morning to reach marginal fresh highs for the day before a modest late correction. The rise in the USD was assisted by oil moving of its lows as Trump made belligerent comments towards Iran as he spoke to the UN. However oil, unlike the USD. Did not fully erase earlier losses. There was no significant data and comments from Fed’s Barkin were moderate.
USD/JPY recovered to 157.50 after finding a base at 157 while EUR/USD slipped to 1.1440 from 1.1460. EUR/GBP was quiet and EUR/CHF stabilized after European losses. USD/CAD rose as far as 1.408 from 1.404, but AUD/USD saw little movement.
European session
All eyes on Iran and Middle East news with the focus on diplomatic efforts at the UN meetings. After initially opening slightly higher, Brent has broken just below $100, down $1 and with a day low of $98.60~.
Driving the action was a Kyodo News report suggesting Iran had offered to open the Strait within 7 days on condition of the US easing its blockade. Devil will be in the details, but plays generally to the notion that the UN meet provides the window for possible renewed deal making efforts. Trump could certainly do with a pre-midterm “victory” with polls down at extreme lows.
USD/JPY initially looked a little higher in the 157-8 band but now back to re-testing through support. Japan on holiday early week, wary of MoF gatekeeping. Oil dip is also a net Japan positive, if also bolstering risk. US10s also -2bp and edging off the 5% level against this backdrop
NZD sees a ½% bounce. RBNZ’s Breman somewhat hawkish (albeit with oil key), and move is reactive after steep recent selloff towards 3month lows. Various central bank speakers due but main focus remains on the leaks, rumours and reports out of the Iran talks.