North American Summary and Highlights 11 October
Overview - UK GDP was on consensus, US PPI soft and Canadian employment strong, but FX movement was limited.
North American session
US PPI data was a little softer than expected, unchanged overall and up 0.2% ex food and energy, but the USD’s dip quickly found buyers and the USD moved slightly higher, though USD/JPY and EUR/USD ended not far from pre-data levels around 149 and 1.0940 respectively. EUR/GBP and EUR/CHF saw little movement. October’s preliminary Michigan CSI partially reversed a rise in September.
USD/CAD saw a 60 pip dip to a low of 1.3725 on a stronger than expected 46.7k rise in Canadian employment, with unemployment falling to 6.5% from 6.6%, though the move was later corrected to near pre-data levels with wage growth having slowed to 4.5% from 4.9% yr/yr. The Bank of Canada’s quarterly business showed activity slightly less weak but inflation expectations significantly less strong. Despite the strong Canadian data AUD/CAD rose to near .93 as AUD/USD advanced above .6750.
European morning session
The USD was mixed in the European morning, gaining some ground against the JPY but falling back slightly against the riskier currencies, although the USD losses were mostly reversed by the end of the morning. GBP sustained its gains, rising to 1.3070 from 1.3050, but EUR/USD and AUD/USD were essentially unchanged. USD/JPY gained 20 pips to 148.90.
The main data during the morning was UK August GDP, which showed the expected 0.2% m/m gain, which was also a 0.2% gain on the last 3 months following flat numbers in June and July. The strength was concentrated in manufacturing in August, which rose 1.1%, although this followed a 1.2% decline in July. Services rose less than expected at 0.1%. The UK trade deficit came in below expectations at GBP15.06bn. EUR/GBP fell 10 pips to 0.8370.