Forex - US North American Summary and Highlights 16 Oct


 20:06 (GMT) 16 Oct

  [Forex Highlights]

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Overview

US North American Summary and Highlights 16 Oct (0101-PPLQ-C04)

GBP remained the main focus with the UK and EU seen to be getting close to a deal but concerns persisting if the Northern Irish DUP would back it. Weak US retail sales weighed on equities and UST yields, but FX focus was elsewhere.

News highlights

- US Sep retail sales -0.3% vs +0.3% exp, ex auto -0.1% vs +0.2% exp.

- US Oct NAHB homebuilders' index rose to 71 from 68 vs 68 exp.

- Fed's Evans and Kaplan expressed uncertainty over whether to ease again.

- Fed's Beige Book saw slight-modest growth, downgraded from modest in the 3 preceding reports.

Currencies:

US North American Summary and Highlights 16 Oct (0101-PPLQ-C01)

GBP advanced on a report that the DUP had removed their objections to a Brexit deal, but continuing even after this was denied by the DUP. As the session continued it was suggested that VAT remained the sole remaining obstacle, the DUP position still seen crucial. GBP saw only a modest fall from the highs as the BBC reported there would be no deal by the end of the day. GBP/USD peaked at 1.2875, EUR/GBP touched below .86. UK CPI was a little on the weak side of expectations but had no market impact.

EUR/USD was lifted as far as 1.1085 by the GBP rally before a modest correction. Bundesbank's Weidmann said the soft patch was likely longer and deeper than he thought. Earlier Eurozone final CPI was a little weaker than the preliminary reading, up 0.8% y/y against 0.9% expected.

US North American Summary and Highlights 16 Oct (0101-PPLQ-C02)

EUR/NOK moved to new all-time highs above the 10.16 high from December 2008. There was no obvious news trigger, though the oil price was then a little lower. Gains in oil later in the day helped USD/CAD fall below 1.32, despite a slightly softer than expected Canadian CPI. AUD/USD keeping pace as AUD/CAD found buyers below .89.

US retail sales were weaker than expected. US markets priced a slightly higher probability of a Fed cut this month after the retail sales data, but FX was little affected, USD/JPY quickly rebounding from a knee-jerk dip and focus on other currencies elsewhere.

Bonds:

US North American Summary and Highlights 16 Oct (0101-PPLQ-C03)

USTs were chopped around by the Brexit headlines, but the softer than expected retail sales data allowed the market to pivotally steepen with 2s -3bp as pricing for an Oct ease was reinforced. Fed Evans offered mixed comments, open minded on more easing while seeing policy in a good place after two cuts, Kaplan later giving a similar view. 2s -3.7bps @ 1.58%, 5s -3.6bps @ 1.56%, 10s -3.1bps @ 1.74%, 30s -0.7bps @ 2.23%.

Agency Spreads: Freddie/Fannie 5s -0.1/-0.4 bps, 10s +0.2/-0.2 bps.

Swap Spreads: 2s -0.71bps, 5s -0.83bps, 10s -0.65bps.

Equities

Weak retail sales and China's suggestion it would respond if a House bill on Hong Kong became law weighed on equities, though the Brexit optimism helped kept the market in a tight range.

Still to come -

Data

23:30 GMT - AU: Westpac-MI Leading Index (Sep) % m/m (Prev: -0.28)

00:30 GMT - AU: Unemployment (Sep) 4cast: 5.2% (Mkt: 5.3 Prev: 5.3)

00:30 GMT - AU: Employment (Sep) 4cast: 20 k (Mkt: 15 Prev: 34.7)

00:30 GMT - AU: Participation Rate (Sep) 4cast: 66.2 (Mkt: 66.2 Prev: 66.2)

04:30 GMT - NL: Unemployment (sa) (Sep) % (Prev: 3.5)

05:30 GMT - JP: Tokyo Department Store (Sep) % y/y (Prev: 4.7)

07:30 GMT - SE: Unemployment Rate (Sep) % (Mkt: 6.7 Prev: 7.1)

08:30 GMT - UK: Retail Sales (inc Auto Fuel) (Sep) % m/m (Mkt: 2.9 Prev: 2.2)

08:30 GMT - UK: Retail Sales (ex Auto Fuel) (Sep) % m/m (Mkt: -0.1 Prev: -0.3)

08:30 GMT - UK: Retail Sales (inc Auto Fuel) (Sep) % y/y (Mkt: 3.1 Prev: 2.7)

08:30 GMT - UK: Retail Sales (ex Auto Fuel) (Sep) % y/y (Mkt: -0.2 Prev: -0.2)

09:00 GMT - EU: Construction Output (Aug) % m/m (Prev: -0.7)

09:00 GMT - EU: Construction Output (Aug) % y/y (Prev: 1.1)

12:30 GMT - CA: Manufacturing sales (Aug) 4cast: 0.8% m/m (Mkt: 0.7 Prev: -1.3)

12:30 GMT - US: Initial Claims (12 Oct) k (Mkt: 215 Prev: 210)

12:30 GMT - US: Housing Starts (Sep) 4cast: 1320k (Mkt: 1318 Prev: 1364)

12:30 GMT - US: Building Permits (Sep) 4cast: 1340k (Mkt: 1340 Prev: 1425)

12:30 GMT - US: Philadelphia Fed Survey (Oct) (Mkt: 8 Prev: 12)

13:15 GMT - US: Capacity Utilization (Sep) 4cast: 77.5% (Mkt: 77.7 Prev: 77.9)

13:15 GMT - US: Industrial production (Sep) 4cast: 0.1% m/m (Mkt: -0.2 Prev: 0.6)

23:30 GMT - JP: Natl CPI (Sep) 4cast: 0.2% y/y (Mkt: 0.2 Prev: 0.3)

Events

22:15 GMT - AU: RBA's Debelle speaks in Sydney

00:00 GMT - EU: EU Council Meeting

17:30 GMT - FR: Banque de France's Villeroy speaks in Washington

18:00 GMT - EU: ECB's Visco speaks in Washington

18:00 GMT - US: Fed's Evans takes part in Fed listens event

18:00 GMT - US: Fed's Williams speaks in New York

20:30 GMT - EU: ECB's Knot speaks in Washington

21:00 GMT - EU: ECB's De Cos speaks in Washington


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