North American Summary and Highlights 20 September

North American session

The USD was little changed in North America, with USD/JPY establishing a 143.50 to 144.50 range after its European gains. The USD saw some early losses, particularly versus the CAD after a stronger than expected 0.9% rise in July Canadian retail sales, but these were subsequently reversed and more. The USD however edged back down after comments from Fed’s Waller, who justified the 50bps easing on softer core PCE inflation signals. 

EUR/USD was little changed near 1.1160, and USD/JPY ended near 144. EUR/CHF was firmer near .9495 but EUR/GBP softer near .8380. AUD and CAD were little changed versus the USD, with AUD/CAD losses after the Canadian data erased.

European morning session

USD/JPY gained a figure and a half through the European morning session following the Ueda press conference, which was seen as showing a less hawkish stance than communicated in July. The trigger seems to have been Ueda’s indication that market remain unstable, in reference to a question about deputy governor Uchida’s remark that the BoJ would not raise rates while markets remain unstable. Markets also reacted to the comment that there is some time to make decisions on monetary policy because upside price risks have decreased given recent FX moves. Other than that, Ueda’s comments remained broadly hawkish, and there was minimal movement in Japanese yields, but the JPY nevertheless weakened sharply. 

Otherwise, the main news was the UK retail sales data for August, which came in stronger than expected at 1.0% m/m, and briefly pushed EUR/GBP to new lows for the year at 0.8381, the lowest since August 2022, although this move was largely reversed by the end of the morning. The USD was only marginally higher other than against the JPY, although the CHF did also weaken somewhat in sympathy, with EUR/CHF gaining 20 pips to 0.9470.