- Equity markets climb as Treasury Yields slide
- Rishi Sunak expected to become UK PM today
- US dollar firms from Friday’s closing levels.
USDCAD snapshot: 1.3711-15, overnight range 1.3609-1.3753, close 1.3645, WTI $83.81, Gold $1649.61
The Canadian dollar traded erratically overnight due to ever-shifting global risk sentiment.
USDCAD plunged from 1.3853 Friday to a low of 1.3609 in early Asia trading today. Friday’s drop was because of a Wall Street Journal story that quoted unnamed Fed officials suggesting the policymakers would discuss the pace of Fed rate hikes at the November 2 FOMC meeting.
Asia markets opened with reports the Bank of Japan was intervening to sell USDJPY continuing the intervention seen Friday. USDJPY plunged from 147.64 to 145.55 but if it was intervention, it didn’t accomplish anything. USDJPY quickly rallied and climbed to 149.70, before sliding to 149.01 in NY.
EURUSD traded in a 0.9808-0.9899 range, unable to make headway despite BoJ intervention to sell USDJPY. Traders are cautious ahead of the October 27 ECB meeting where a 75 bp hike is priced in. There are also chunky option strikes expiring today at 10: am NYT with $2.5 billion in the 0.9800-20 area and $3.3 billion in the 0.9840-75 zone. Eurozone Manufacturing PMI was 46.6 in October, compared to 49.1 in September.
GBPUSD gapped lower in Asia around the time of suspected BoJ intervention in USDJPY then rose from 1.1299 to 1.1405. Former Chancellor of the Exchequer Rishi Sunak is expected to be crowned Prime Minister today which puts and end to “political uncertainty” issues. Bond traders were happy, and the UK 10-year Gilt yield fell to 3.86% from 4.05% at Friday’s close.
UK Manufacturing and Services PMI data were weaker than expected, which helped knock GBPUSD from its peak to 1.1310 in NY.
USDJPY traded erratically in a 145.55-149.70 range thanks to Bank of Japan intervention and a drip in the US 10-year Treasury yield to 4.193% from Friday’s close of 4.33%.
AUDUSD dropped, rallied then dropped again in a 0.6274-0.6410 range. RBA Deputy Governor Chris Kent said there would be further rate hikes which will be data dependent (aren’t they all?). Manufacturing PMI was modestly better than expected at 52.87 (forecast 52.5).
Today’s US data includes the Chicago Fed National Activity Index.
