Forex today: subdued range bound session ahead of key events, DXY unchanged
Forex today was subdued ahead of the FOMC and plenty of other data events on the radar making for a stable US dollar and rates.
US 10yr treasury yields moved sideways between 2.36% and 2.38%, while 2yr yields climbed from 1.57% to 1.59%. The Fed fund futures yields continued pricing the chance of a December rate hike at 96%. The DXY was unchanged on the day and majors were confined to familiar ranges. Equities were biased higher. As for data, the Conference Board and Chicago Fed hit multi-year highs.
As for the other currencies, Sterling outperformed on the back of Barnier who said he is ready to speed up Brexit negotiations. EUR remained confined to a 1.1625-1.1660 range while bund yields were below the 200 DMA and pressures the single currency. USD/JPY rose from 113.00 to 113.73 on the back of the BOJ although the carry trade holds up the advances. In respect to the antipodeans, AUD/USD slipped from 0.7690 to 0.7640 before steadying around 0.7660, weighed by lower metal prices with iron ore slipping below trend support. NZD/USD ground lower from 0.6865 to 0.6831 with the disappointing business confidence report pressuring the bird.
Key events ahead in Asia
Analysts at Westpac offered their outlook for the key risk events ahead in Asia: "NZ: Labour data for Q3 should be positive, with an expected unemployment rate of 4.7% (from 4.8%), and employment growth of 1.0%. Participation should rise too, partly statistical payback from an overly weak Q2. Wage inflation is expected to jump 1.0%, but a good chunk of that will be due to a one-off collective wage rise for aged care workers; excluding the one-off, wage inflation would be around 0.6% in Q3.
Australia: Oct CoreLogic home value index is expected by Westpac to be flat. This would continue the slowing in annual growth to 7%yr, with Sydney experiencing a particularly abrupt slowdown. Oct AiG manufacturing PMI is released, reflecting an improved manufacturing sector through 2017, last at 59.8.
China: Oct Caixin manufacturing PMI is out with the official measure coming in slightly lower than expectations yesterday."
Key notes from the US session
- US dollar and US bond yields fairly stable ahead of FOMC - Westpac
- Shooting in downtown Manhattan, multiple victims - BNO News
- US Sen. Rep. Leader McConnell: Will be “full speed ahead” in coming weeks on tax legislation
- US: Employment costs expected to pick up further - Wells Fargo
- US: Home prices growth reaches highest pace since 2014 - Wells Fargo
- Fed in the spotlight - UOB
- Suspect the risk is that the Fed hikes more rather than less - BBH
- US: Compensation costs for civilian workers increased 0.7% in September
- US: October Chicago Business Barometer climbs to 66.2
- FOMC: Do not expect change in the target range for the federal funds rate - Rabobank