North American Summary and Highlights 23 September

North American sessionEUR/USD saw some recovery from its European lows but was unable to manage a full reversal, and after touching above 1.1140 slipped back below 1.1120. EUR/GBP and EUR/CHF extended losses to near .8330 and .9410 respectively.

USD/JPY saw some early gains above 144 but later slipped back to 143.50 as early gains in UST yields faded, in part on slippage in oil. The USD was softer versus the riskier currencies, GBP/USD rising to near 1.3350, AUD/USD rising to near .6850 and USD/CAD falling to near 1.35. 

Fed’s Kashkari and Bostic backed the 50bps easing but suggested subsequent moves would be smaller, but Goolsbee later sounded more dovish, expressing concerns about labor market risks. US S and P PMIs slipped, manufacturing to 47.0 from 47.9 and services to 55.4 from 55.7, but looked resilient relative to those in Europe. 

European morning session

EUR/USD fell 60 pips through the European morning as the Eurozone PMI data came in much weaker than expected. The composite index fell to 48.9 from 51.0, and the manufacturing index fell to 44.8 from 45.8, both a lot weaker than expected. The weaker data pulled Eurozone yields lower, with 2 year yields down around 10bps, and triggered some modest declines in equities. The weaker risk tone helped USD/JPY to fall around 60 pips to 143.60. 

UK PMIs were also weaker than expected, but fell less sharply than the Eurozone PMI, with the composite index down to 52.9 from 53.8, and the manufacturing index down to 51.5 from 52.5, and remained at much higher levels. EUR/GBP made new lows for the year at 0.8355.