Forex news from the European trading session - 15 October 2021
Headlines:
- PBOC says that inflation risks are controllable
- PBOC says that Evergrande risks to the financial system are controllable
- China president Xi says will achieve 'common prosperity' by around the year 2050
- Yen pairs continue to sizzle towards the end of the week
- ECB's Wunsch: Inflation jump is transitory
- France September final HICP +2.7% vs +2.7% y/y prelim
Markets:
- GBP leads, JPY lags on the day
- European equities higher; S&P 500 futures up 0.4%
- US 10-year yields 2.2 bps to 1.541%
- Gold down 0.9% to $1,780.50
- WTI up 1.0% to $82.10
- Bitcoin up 3.3% to $59,363
It was a cheery session for risk trades, even with things keeping rather quiet as key headlines were few and far between in the market today.
European indices opened higher and are maintaining decent gains, with US futures also pointing to a positive open after the solid performance yesterday.
Treasury yields are also tilting a little higher as the retreat over the past few days meets a stall. 10-year yields are up over 2 bps to 1.54% and put everything together, it is underpinning yen pairs further this week.
USD/JPY climbed to its highest since October 2015 above 114.00 to 114.30 while we are seeing significant moves across other yen pairs too on the day.
GBP/JPY has broken to its highest since June 2016 as buyers look to seal a break above the January 2018 high of 156.61. CAD/JPY is also extending its good run of form in a push from 92.10 to 92.60 - its highest levels since December 2015. Meanwhile, NZD/JPY is also up to its highest levels since January 2018 on a push above 80.00 to 80.70.
The dollar is trading more mixed in the meantime as it is keeping little changed against the euro, loonie and aussie. But the pound is notably leading gains (I'd attribute this more to a GBP/JPY move) with cable up from 1.3690 to 1.3750 on the day.
US retail sales data will be a key risk event to watch in the session ahead as the market keeps a focus on risk sentiment and technicals ahead of the weekend.
In any case, I'd imagine dip buyers will be able to hold their ground in case of any setback from the data release or if we do see some early selling in equities later on.
