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Calmer Yield Curve Soothes Currency Markets

FOREX
  • The greenback traded softer on Thursday, edging lower against all others in G10 to tip the USD Index briefly back below the Wednesday low. A negative close for the USD Index would be the third consecutive decline, however prices are still well clear of the recent low at last Friday's 105.658. Nonetheless, the medium-term uptrend posted off the July low remains intact for now, keeping pullbacks corrective for now.
  • The US yield curve was considerably quieter Thursday, lending an element of consolidation to currency markets more broadly. This kept GBP, EUR and JPY within recent ranges and few fresh technical signals emerged in a relatively muted session.
  • Oil tied currencies traded heavy, helping keep NOK and CAD toward the bottom half of the G10 table. Brent and WTI crude futures extended the recent decline, putting Brent over $10/bbl off the recent cycle high. Demand concerns evident in this week's EIA release, expectations of economic weakness and relentless CTA selling have variously been cited as the driver of oil's decline. USD/CAD printed a new cycle best at 1.3786, marking five consecutive sessions of higher highs.
  • Focus Friday rests on the September nonfarm payrolls report, at which markets expected the US to have added 170k jobs over the month. Primary dealers are somewhat more positive, with a median view of 180k, with the unemployment rate expected to correct lower after an upside surprise in August. Average hourly earnings data is also forecast to re-accelerate to 0.3%, further marring any expectations of a swift return for inflation to target.
  • Outside of nonfarm payrolls, German factory orders, Italian retail sales and the Canadian jobs report are also on the docket. Meanwhile, Fed's Waller is set to speak.
Energy BulletsCommodities
Energy BulletsCommodities

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