North American Summary and Highlights 2 May
Overview - With UST yields falling despite strong US data, the USD ended Thursday weaker, led by USD/JPY.
North American session
The USD saw some early gains, primarily versus the European currencies, after a stronger than expected 4.7% rise in Q1 US unit labor costs and lower than expected initial jobless claims, unchanged at 208k. However the spike in UST yields on the data was not sustained, with focus remaining on the less than hawkish FOMC tone from Wednesday. The USD ended weaker across the board.
EUR/USD rebounded to 1.0730 from a low of 1.0674 and GBP/USD rebounded to 1.2540 from a low of 1.2472. USD/JPY saw no response to the data and fell steadily lower through the session, falling over a big figure to near 153. With equities stronger the commodity currencies were firm, AUD/USD up 40 pips to .6570 and USD/CAD down 40 pips to 1.3675, despite an unexpected move in deficit from the Canadian trade balance.
European morning session
The USD moved slightly higher against the EUR, GBP and scandis, but fell back against the JPY and CHF and was little changed against the CAD and AUD in the European morning. EUR/USD lost around 20 pips to 1.07, and GBP/USD moved in line, although GBP did see some weakness earlier in the session after the OECD lowered their UK growth forecast while raising their forecast for global growth. This triggered a EUR/GBP move from 0.8550 to 0.8560, but this was reversed by the end of the morning.
The CHF and JPY were the strongest currencies, with the CHF benefitting from higher than expected Swiss CPI for March, which showed a rise to 1.4% y/y against the market consensus of 1.1%. EUR/CHF fell sharply from 0.9820 to 0.9760 in response. USD/JPY fell from 155.80 to 155.25 without an obvious trigger, although the BoJ intervention in NZ time overnight may have triggered some further unwinding of short JPY positions after Europe returned from the May Day holiday. The NOK was the weakest currency through the morning, with EUR/NOK rising 4 figures to 11.86 with no obvious trigger, although the weaker oil price in the last couple of days may be a factor.