North American Summary and Highlights 21 Oct
Overview - USD/JPY continued to advance in Europe. North American trade was subdued outside a fall in USD/CAD after a stronger than expected Canadian CPI.
North American session
The only significant move was a dip in USD/CAD to 1.4015 from 1.4040 as a stronger than expected rise in September Canadian CPI to 2.4% yr/yr from 1.9% created some doubts over a potential Bank of Canada easing on October 29. The move was initially reversed before a fresh dip that got close to 1.40 before finding a base. Most other pairs were little changed, USD/JPY near 151.90, EUR/USD near 1.16 and AUD/USD near .6490.
European morning session
USD/JPY was the main mover in the European morning, gaining to 151.80 in a choppy session. JPY weakness overnight was extended early in the session with the confirmation of Takaichi as the new PM. However, the announcement of Katayama as the new finance minister triggered a correction of half a figure to 151.10, as she is on record as saying that USD/JPY’s fair value is in the 120-130 region. But the dip was bought, and USD/JPY finished the session at 151.80. CHF/JPY made another new all-time high at 1.9120, but EUR/CHF bounced a little after an initial dip to test the November low at 0.9204.
The USD was generally firmer through the session, with gains against the EUR possibly helped by comments from ECB chief economist Lane, who warned of the potential vulnerability of the Eurozone banking system to USD funding problems. EUR/USD fell 25 pips to 1.1610. AUD/USD was also softer, falling around 10 pips to 0.6480, and GBP/USD also fell slightly at the end of the session. Earlier, UK public sector borrowing numbers for September were in line with consensus. Scandis were the best performers on the morning, gaining slightly against the USD as well as against the EUR.