Forex today saw a sell-off in the greenback, stocks and oil while investors took a break from chasing risk while Wall Street's momentum slows with a lack of reason to be overly bullish.
US 10-yr treasury yields also dropped in the 10-years from 2.41% to 2.37%, although the 2yr yields were robust, up from 1.68% to 1.70% and again, the highest level since Oct 2008. The Fed fund futures yields continued to price the chance of a December rate hike at almost 100%, underpinning support in the greenback at 93.80. The US dollar index fell sharply, down 0.8% on the day to a low of 93.74 from 94.54 the high on Tuesday.
USD/JPY was lower with stocks sinking and longer-term benchmark yields fragile. USD/JPY fell from 113.90 to 113.31. However, the best performer was the single currency. EUR/USD made a fresh a three-week high on the back of a solid performance in the European session due to German economic data. German flash Q3 GDP figures and EMU’s economic sentiment for the current month, (30.9 vs 29.3 expected), set the cross on fire as German bund yields firmed. The 10-year benchmark climbed above 0.43% recording at fresh 3-week highs overnight. EUR/USD rallied from 1.1670 to 1.1805. GBP/USD also performed, but as well. GBP/USD rallied from 1.3075 European lows to a high of 1.3187, ending +0.5% higher. The cross was consolidating the bid and actually tailed off in NY from 0.8974 to 0.8935 and back to close at 0.8956.
Meanwhile, the commodity bloc was on the back-foot and the associated currencies the laggards of the sessions. AUD/USD consolidated after the disappointing Chinese data, sideways between 0.7613 and 0.7650 while the Kiwi took the brunt of things in European trade, extended its domestic session decline to 0.6845 before a recovery to 0.6888 in NY.
Key events ahead in Asia:
Analysts at Westpac offered the key events for the forthcoming Asian session as follows:
"NZ: REINZ house price and sales data for Oct will be inspected for any further slowdown in the housing market. Australia: Q3 wage price index is expected to increase 0.7%, relative to recent prints around 0.4-0.5%. The higher estimate relates to the Fair Work Commission’s decision to increase the minimum wage by 3.3%, compared to the previous year’s 2.4%. Nov Westpac-MI Consumer Sentiment previously made a surprise lift above 100 – optimists outweighing pessimists. Recent political instability could affect Nov’s result. Oct new vehicle sales are expected by Westpac to be flat based on preliminary industry figures. Japan: Q3 GDP is expected to rise 0.4%, a still above-trend pace but slower than Q2’s 0.6% gain with consumption partials a bit flatter over the quarter."
Key notes:
- Wall Street recovers part of early losses, still ends day lower
- Senate plans to end Obamacare mandate to make room for tax cuts - NY Times
- Market wrap: risk-averse mood permeated US markets overnight - Westpac
- Fed's Bostic: Flattening yield curve may signal more confidence in US economy
- US commerce chief Ross: Will be difficult for TPP 11 countries to finalize an agreement
- Fed's Bostic: Appropriate to raise rates gradually over next couple years
- US PPI: Inflation accelerates at the start of Q4 - Wells Fargo
- Mohamed El-Erian to become Fed No2? - WSJ
- US: Small business optimism rebounds in October - Wells Fargo
- Fed's Bullard: Current interest rate level likely to remain appropriate over near-term
- US: PPI for final demand rises 0.4% in October
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