Forex news from the European trading session - 18 October 2021
Headlines:
- OPEC+ compliance with oil output cuts seen at 115% in September - sources
- BOE likely to hike rates in November meeting - Goldman Sachs
- The transitory narrative continues to fall apart
- ECB's Visco: Market expectations "not that consistent" with ECB guidance
- SNB total sight deposits w.e. 15 October CHF 714.3 bn vs CHF 714.1 bn prior
- Oil gains not letting up to start the week
- Japan PM Kishida: No plan to change sales tax
Markets:
- USD leads, AUD lags on the day
- European equities lower; S&P 500 futures down 0.2%
- US 10-year yields up 2.2 bps to 1.598%
- Gold down 0.3% to $1,762.60
- WTI up 1.7% to $83.60
- Bitcoin down 1.9% to $61,332
Headlines were few and far between on the session as we kick things off with more of a quiet one in Europe on the new week.
Inflation and rate expectations are still among the key themes in the market and surging NZ CPI and BOE governor Bailey laying out the carpet for rate hikes set the stage for some early market moves today.
The front-end of the yield curve in UK gilts are aggressively pricing in a move by the BOE, adding to the dying narrative that inflation is going to be transitory.
US Treasury yields also pushed higher and that provided some support for the dollar, as it advances across the board in the major currencies space.
Equities were more sluggish after last weeks' gains, not helped by softer China GDP data from Asia Pacific trading earlier in the day.
Going back to FX, EUR/USD kept lower around 1.1580 levels for the most part while USD/JPY held a light advance around 114.20-30 levels on the session.
USD/CAD is seen sticky around 1.2380-90 levels while the aussie is the laggard as AUD/USD falls below 0.7400 but is keeping a hold of its 100-hour moving average. Some added selling in AUD/NZD isn't helping with aussie sentiment to start the week.
Elsewhere, oil is not letting up on gains from last week as WTI is up another 1.7% on the day and building on a push above $83 going into North American trading.
