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Overview
Heading into the opening stages of European trade, commodity linked currencies underperformed amid weakness seen in crude prices coupled with the declines in the metals complex after Shanghai metals trade opened, where silver snapped 4 consecutive days of gains. This saw AUD/USD break back below the 0.7200 level and NZD/USD test the 0.6600 handle to the downside.
After going through the European cash equity open, USD saw some notable selling pressure in a move which was primarily led by a flight-to-safety; benefiting JPY, EUR and CHF. This mainly emanated from initial downside in Deutsche Bank shares after announcing a sizeable impairment charge, with the latest German export data also a cause for concern. However, this sentiment was relatively short-lived as Deutsche Bank shares recovered with FX markets thereafter relatively rangebound heading into the Bank of England rate decision and minutes release.
In terms of the BoE, as widely expected the central bank kept policy on hold with the vote split remaining at 8-1. Focus for the release was largely placed on accompanying comments with the MPC viewing short-term inflation outlook as weaker since August and now expect CPI to stay under 1.0% until spring 2016. This subsequently led GBP/USD to trend lower for a bulk of the remainder of the session. As such, the USD-index pulled-away from its session lows in what was otherwise a relatively light session from a macro perspective with the ECB minutes unable to provide any fireworks.
Looking ahead, focus will be on the FOMC minutes release after-market. In terms of expectations for the event, markets are looking for any clear indicators as to whether a rate-hike this year remains a possibility. If commentary reiterates that labour market conditions are still in focus, this could cause a dovish response due to last week’s September’s NFP release.
Heading into the opening stages of European trade, commodity linked currencies underperformed amid weakness seen in crude prices coupled with the declines in the metals complex after Shanghai metals trade opened, where silver snapped 4 consecutive days of gains. This saw AUD/USD break back below the 0.7200 level and NZD/USD test the 0.6600 handle to the downside.
After going through the European cash equity open, USD saw some notable selling pressure in a move which was primarily led by a flight-to-safety; benefiting JPY, EUR and CHF. This mainly emanated from initial downside in Deutsche Bank shares after announcing a sizeable impairment charge, with the latest German export data also a cause for concern. However, this sentiment was relatively short-lived as Deutsche Bank shares recovered with FX markets thereafter relatively rangebound heading into the Bank of England rate decision and minutes release.
In terms of the BoE, as widely expected the central bank kept policy on hold with the vote split remaining at 8-1. Focus for the release was largely placed on accompanying comments with the MPC viewing short-term inflation outlook as weaker since August and now expect CPI to stay under 1.0% until spring 2016. This subsequently led GBP/USD to trend lower for a bulk of the remainder of the session. As such, the USD-index pulled-away from its session lows in what was otherwise a relatively light session from a macro perspective with the ECB minutes unable to provide any fireworks.
Looking ahead, focus will be on the FOMC minutes release after-market. In terms of expectations for the event, markets are looking for any clear indicators as to whether a rate-hike this year remains a possibility. If commentary reiterates that labour market conditions are still in focus, this could cause a dovish response due to last week’s September’s NFP release.
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