North American Summary and Highlights 8 September
Overview - The USD was supported by Middle East risk but came off its highs to end little changed.
North American session
Oil prices came off the highs before renewed gains late in the day with fresh US strikes on Iran reported. An early dip in USTY yields was not sustained, while equities remained lower if stabilizing. The USD saw some early slippage but after that was broadly stable and not much changed on the day.
USD/JPY slipped back below 154 while EUR/USD was slightly firmer at 1.1630. EUR/GBP erased a European dip and EUR/CHF erased a European bounce. USD/CAD was softer below 1.38 ignoring Canadian trade retaliation on the US coming into effect and AUD/USD firmer near .7220.
USD data showed August’s NFIB survey on small business optimism almost unchanged from July, as were August inflation expectations as surveyed by the New York Fed. Later consumer credit saw a strong July rise of $18.1bn.
European session
Asia follow-through move on USD/JPY into the 153-2 lows proved exhaustive for now with the low of 152.87~, and bounce back for a 154~ break re-test. Obviously very oversold on recent days moves, but no full test/hold of the big 152.10-00 lows yet.
Oil remains under some pressure after US-Iran rhetorical escalations and as Houthi attacks affect Saudi facilities today, Brent pushing at $100 ceiling. Goldmans notes that while crude flow has been 70% pre-war, products have been more like 35%, and sees risks to $120 on Brent if supply remains squeezed.
AUD/NZD picks up on the break of 1.23~ for new post Apr13 highs. 1.2345. 61.8% Fib, 1.2400/50 congestion above. Recent relative CB sentiment going with the grain. RBA’s Hauser notes that focused on upside risks to inflation, RBA’s Hunter suggests board may have to raise rates further if sense that inflation will be stronger, do want to see a softer economy vs trend.