FOREX: USDJPY Rises with US Yields, NOK Boosted by Oil Price Surge
Oct-23 17:49
- US yields rose across the board on Thursday, assisted by the near 6% surge for crude futures on the back of sanctions on Russian oil producers. This dynamic has weighed on the Japanese yen specifically, allowing USDJPY to further extend its bounce to 152.80 session highs. Rallying equities following the US open has also provided a cross/JPY tailwind.
- Overall, the USD index is just 0.15% higher on Thursday, likely a result of market participants awaiting the US CPI report scheduled on Friday.
- Markets were leaning against GBP through the London close, helping pressure GBPUSD to new daily lows and, importantly, EURGBP through yesterday's post-inflation high. There's been no specific newsflow or headlines behind the GBP underperformance so far Thursday, however the currency is the second worst performer in G10.
- With EURGBP through 0.8713, markets are narrowing in on 0.8725 and 0.8751, the next key upside levels (marking the Oct 10 & 17 and Sep 25 high respectively).
- The Australian dollar tops the G10 leaderboard, with AUDJPY (+0.92%) a notable beneficiary of today’s dynamics. For AUDUSD, spot has risen back above 0.6500 and remains in consolidation mode. Attention is on the Oct 14 reversal pattern - a hammer candle. It signals the end of the bear cycle that started Sep 17. Note that moving average studies continue to highlight a dominant medium-term uptrend.
- NOK is off the session's strongest levels, but also continues to outperform the G10 basket amid today's solid rally in crude oil benchmarks. USDNOK is down 0.4%, testing support at 9.9754 (50% retracement of the September 17 to October 14 upswing). A breach would expose clustered support around the 9.9000 level.
- Ahead of the US CPI report, UK retail sales and Eurozone flash PMIs are expected. RBA Governor Bullock is also due to speak Friday.
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US: Fewer Republicans Are Satisfied With Direction Of Country
Sep-23 17:47
A new Gallup survey has found, “Americans’ satisfaction with the way things are going in the U.S. is at its lowest since President Donald Trump took office in January, with 29% now saying they are satisfied. This contrasts with 31% to 33% readings each of the past three months and a term high of 38% in May.”
- Gallup notes, “Most of the decline in U.S. satisfaction this month is the result of fewer Republicans saying they are satisfied, now 68%, down from 76% in August. Satisfaction among both independents and Democrats is essentially unchanged, at 23% and 1%, respectively.”
Figure 1: In general, are you satisfied or dissatisfied with the way things are going in the United States at this time? (Since 2021)
Source: Gallup
SECURITY: Trump Comments on Russia/Ukraine
Sep-23 17:36
*ZELENSKIY: WILL DISCUSS SECURITY GUARANTEES WITH TRUMP
- *ZELENSKIY SPEAKS ALONGSIDE TRUMP IN NEW YORK
- *TRUMP: NATO COUNTRIES SHOULD SHOOT DOWN AIRCRAFT ENTERING SPACE
- *TRUMP: WE'LL KNOW ABOUT PUTIN IN A MONTH
- *TRUMP: THINK ORBAN WILL STOP BUYING RUSSIAN OIL
- *TRUMP: UKRAINE IS DOING VERY GOOD JOB STOPPING LARGE ARMY
- *TRUMP: RUSSIAN ECONOMY IS TERRIBLE RIGHT NOW
- *TRUMP ON BACKING UP NATO SHOOTING RUSSIAN JETS: IT DEPENDS
- Source: Bbg
BONDS: EGBs-GILTS CASH CLOSE: Gilts Outperform Bunds On PMI Data
Sep-23 17:34
Gilts outperformed Bunds Tuesday amid mixed European PMIs.
- September Flash PMI data was the scheduled highlight of the session, and it turned out to be the biggest market mover.
- Overall Eurozone composite PMIs were in-line with expectations. However a French PMI miss across both Services and Manufacturing with softer inflationary readthrough saw core FI boosted, after which more mixed German readings including a return to expansion for Services with more solid output prices saw Bunds retrace lower.
- The UK saw softer-than-expected PMI readings on both Manufacturing and Services, seeing Gilts move through Monday's strongest levels, albeit the report noted solid prices charged.
- A subsequent pickup in oil prices and equities had little impact, but in-line US PMIs later drove an uptick in global yields before they faded into the European close.
- The UK curve bull flattened, with Germany's twist flattening. Periphery/semi-core EGB spreads were mixed, with Italy and Spain slightly tighter to Bunds and Greece and France slightly wider.
- Wednesday's calendar includes German IFO data, with BOE's Greene speaking after the cash close.
Closing Yields / 10-Yr EGB Spreads To Germany
- Germany: The 2-Yr yield is up 0.4bps at 2.022%, 5-Yr is up 0.8bps at 2.328%, 10-Yr is up 0.1bps at 2.749%, and 30-Yr is down 1.4bps at 3.343%.
- UK: The 2-Yr yield is down 2.6bps at 3.954%, 5-Yr is down 2.6bps at 4.104%, 10-Yr is down 3.2bps at 4.68%, and 30-Yr is down 5.1bps at 5.497%.
- Italian BTP spread down 0.3bps at 79.4bps / French OAT up 0.7bps at 81.7bps
