North American Summary and Highlights 8 October
Overview - The USD was marginally softer, as UST yields slipped despite gains in oil.
North American session
Early trade saw UST yields spiking in response to strength in oil, given Iranian attacks on shipping ion the Gulf, though yields moved off their highs even before Trump stated he would not attack Iran before the midterm elections, which moved oil off the highs. Oil remained higher on the day but UST yields moved lower. The 30-year action saw a sold reception, if less impressive than Wednesday’s 10 year. Earlier comments from Fed’s Waller had reinforced expectations for a Fed hold in October, but a tightening in December. Initial claims remained very low, down to 197k from 199k.
USD/JPY slipped below 158 while EUR/USD edged back above 1.12 with EUR/GBP steady. ECB minutes showed unanimous backing fir September’s rate hike. USD/CAD slipped to 1.4220 from 1.4260 with AUD/CAD below .99 as AUD/USD stable near .6950.
European session
The USD is trading sideways in Europe, with the FOMC minutes having reinforced the view that the next hike will be in December from the Fed. USTs are also choppy sideways, with the failure to correct lower this week having helped USD bullishness. Next big event is the September U.S. CPI on October 14. Short-term some focus on USD/JPY after a temporary break below 158.00 in early Asia trade.
Meanwhile, the USD has not been moved by new reports from Axios that the Trump administration is discussing plans for a new attack on Iran. The FX market has a certain degree of skepticism that this is just an attempt to act tough with Iran without launching a new phase of the Iran war. EUR crosses were consolidative meanwhile waiting the budget debate next week.