Forex - US North American Summary and Highlights 13 Oct


 20:05 (GMT) 13 Oct

  [Forex Highlights]

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Overview

US North American Summary and Highlights 13 Oct (0100-TGHF-C04)

Core US CPI fell short of expectations, and while US data also implied healthy activity, this hit the USD and UST yields. The UST move was sustained but the USD came off its lows, most notably versus the CAD and EUR.

News highlights

US North American Summary and Highlights 13 Oct (0100-TGHF-C01)

- US Sep CPI +0.5% vs 0.6% exp, ex food and energy +0.1% vs 0.2% exp.

- US Sep retail sales +1.6% vs 1.7% exp, ex auto +1.0% vs 0.9% exp.

- US Oct prelim Michigan CSI 101.1 vs 95.1 Sep final and 95.0 exp, but 1 year inflation expectation falls to 2.3% from 2.7%.

- US Aug business inventories +0.7% as exp, sales +0.7%.

Currencies:

US North American Summary and Highlights 13 Oct (0100-TGHF-C02)

While the USD did take a hit on slightly softer than expected core US CPI, peaking at 1.1874, it did not run away and EUR/USD returned to near pre-data levels, just above 1.1800. Assisting the correction were strong US Michigan CSI data (though inflation expectations fell) and comments from ECB's Draghi suggesting the Eurozone was also seeing a positive growth outlook but little progress on underlying inflation.

USD/JPY saw a low just under 111.70 but was unable to move back above 112.00. While equity markets held up bond yields extended their post-data losses.

GBP is still being led by Brexit news, slightly up on the week in hope of a more conciliatory stance from the EU but still vulnerable to losses if EU Heads of State don't play ball next week. BoE's Carney made some hawkish comments, to a limited response.

AUD and NZD have seen a good step higher and maintained the post data rally better than EUR/USD has. CAD however came under pressure with AUD/CAD squeezed sharply higher, USD/CAD briefly fully reversing a hit on the US data, peaking at 1.2519, before moving back under 1.25.

Bonds:

US North American Summary and Highlights 13 Oct (0100-TGHF-C03)

USTs were all about the tier 1 data and though retail sales came in robust, the focus was always going to be on core CPI, with the disappointing 0.1% print, slightly above unrounded, encouraging a T.note push higher. Stronger UoM confidence was offset by a decline in inflation expectations. After a brief correction the bid returned, the long end moving above levels seen immediately after the CPI data. 2s -2.0bps @ 1.49%, 5s -3.3bps @ 1.90%, 10s -3.9bps @ 2.28%, 30s -3.5bps @ 2.81%.

- Agency Spreads: Freddie/Fannie 5s -0.6/+0.3 bps, 10s 0.0/-0.2 bps.

- Swap Spreads: 2s +0.27bps, 5s 0.00bps, 10s +0.38bps.

Equities:

Financial earnings results were mixed and it was technology, Apple in particular, that led a modest bid in US equities, Trump's walking away from the Iran nuclear deal generating little response.

To Be Released -

Data:

23:01 GMT - UK: Rightmove House Price Index (Oct) % m/m (Prev: -1.2)

23:01 GMT - UK: Rightmove House Price Index (Oct) % y/y (Prev: 1.1)

04:30 GMT - JP: Capacity Utilisation (Aug) % m/m (Prev: -1.8)

04:30 GMT - JP: Industrial Production (Final) (Aug) % m/m (Prev: 2.1)

04:30 GMT - JP: Industrial Production (Final) (Aug) % y/y (Prev: 5.4)

06:00 GMT - NO: Trade Balance (Sep) NOK bn (Prev: 12.4)

09:00 GMT - EU: Trade Balance (sa) (Aug) EUR bn (Prev: 18.6)

12:30 GMT - US: Empire State Survey (Oct) (Mkt: 20 Prev: 24.4)

13:00 GMT - BE: Trade Balance (Aug) EUR mn (Prev: -314.2)

21:45 GMT - NZ: CPI (Q3) % q/q (Mkt: 0.4 Prev: 0)

21:45 GMT - NZ: CPI (Q3) % y/y (Mkt: 1.8 Prev: 1.7)

Events & Auctions

07:00 GMT - SE: Riksbank's Ohlsson Speaks in Stockholm

09:30 GMT - NL: 162-Day Bills Auction (EUR 2bn)

09:30 GMT - NL: Bills Auction

13:00 GMT - EU: ECB's Angeloni Speaks in Massachusetts

14:50 GMT - FR: Bills Auction

15:30 GMT - US: 3mth Bills Auction

15:30 GMT - US: 6mth Bills Auction


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