Europe Summary and Highlights 19 Oct
Fairly slow start to the week, though euro remains heavy on crosses out of w/e French disorder
AUD sees some bounce on session out of China data, recent sellback
Relatively contained start to the week, on the back of last week’s dollar led swings, though euro underperforms and remains weighed on the crosses. Large scale marches and riots in France at the weekend keep OATs and French CDS heavy. While positioning still props EUR/USD after last week’s overbought dollar pullback, EUR/GBP does still nudge a new low on the move into 0.84~ support and off on other crosses.
ECB Lagarde at w/e also notes that the bond selloff will slow inflation (“will slow growth and reduce pass-through by more than projected in our September exercise”), so also rather dovish.
USD/JPY fairly flat just above 158. BoJ’s Ueda says underlying inflation 'quite close' to price goal.
AUD outperforming on the day, on the back of firmer China activity data (GDP, retail…) and corrective out of recent underperformance and short positioning.
Indonesia pressure out of MSCI (equities another -5%) remains an isolated factor.