North American Summary and Highlights 11 May
Overview - In a quiet session the USD was little changed overall.
North American session
USD/JPY rose to 157.25 from 157 and with EUR/USD slightly firmer EUR/JPY pushed above 185 to 185.20. A speech by UK PM Starmer did not end pressure for him to step down and EUR/GBP saw some slippage, but a move off the low kept the eventual move marginal. AUD/USD made modest gains to .7250 but USD/CAD was little changed.
April US existing home sales saw a marginal 0.2% increase to 4.02m, weaker than expected, but with March revised up to 4.01m from 3.98m the net result could be seen as near consensus.
European session
A rather tepid European morning, with the market largely fading the overnight moves seen after Trump’s comments at the weekend. Oil trimmed back gains to around $2 from the $4-5 initial move. At the moment, the market is having to deal with very little signal to noise when it comes to Iran news and comments and so left reluctant to follow through on any initial reactions while waiting for the next headline. As a result, the dollar trimming back the initial markup to reasonably flat across the board and volatility remains somewhat, artificially, compressed at present.
In terms of data, Norway CPI was largely as expected with core CPI at 3.2% from 3%, in line with market and Norge Bank expectations. EUR/NOK initially tested the circa 10.8 area base on the back of the oil bounce initially, before similarly moving back to fairly flat after holding again and as oil trimmed.
ECB Governing Council Member Martin Kocher suggests that "if the situation does not improve significantly, there will be no avoiding an interest rate move in the near future" and that "what's clear is that if the war drags on and energy prices remain high, the risk of second-round effects will increase".
Yields up a touch on the oil move and gilts slightly underperforming, 10s back to looking at 5% after the recent correction, as the market waits to see how the potential challenge to Starmer’s leadership plays out. Though not much action on GBP.
USD/CNH inches another 3year low meanwhile ahead of Trump’s China trade talks and summit, and after firmer data over the weekend and Monday (exports and PPI beating market expectations).