Analysts at Westpac offered a round up of Wednesday’s currency and macro themes from European and North American markets.
Key Quotes:
“EUR/USD fell from 1.1360 to just above 1.1300, probing the August lows. Eurozone inflation accelerated modestly in October, in line with expectations. The headline rate firmed to an annual pace of 2.2% from 2.1%, mostly due to energy, while the core rate accelerated to a still very benign 1.1% from 0.9%.
GBP/USD outperformed and arrested a two-week slide, bouncing from 1.2700 to 1.2830 amid official comments claiming a Brexit deal could be agreed by 21 November. USD/JPY ranged between 112.80 and 113.40.
AUD/USD paid more attention to the firmer US dollar than to equities, slipping from 0.7100 to 0.7070, just under the lows seen after Australia’s soft Q3 CPI data but remaining in very familiar territory. Commodities were not supportive, including falls in spot iron ore, copper and Brent crude oil, to a low since late August.
Underperformer NZD similarly fell from 0.6550 to 0.6515, perhaps also weighed down by the day’s NZ business confidence update. AUD/NZD fell as far as 1.0800 after Australia CPI and the China manufacturing sentiment survey but then rallied steadily, to 1.0850.
The US produced yet another robust batch of data. The Employment Cost Index for Q3 rose 0.8% (0.7% expected), with wages and salaries (+0.9%) accounting for the bulk of the upside surprise rather than volatile benefits (+0.4%). Private sector wages and salaries rose 3.1% in the year, their fastest pace since 2008, up from 2.9%; continuing a steady accelerating trend amid a tightening US labour market. Ahead of this Friday’s non-farm payrolls, the ADP Research Institute said private sector payrolls grew a solid 227k in October, topping the median estimate at +187k. The Chicago PMI slipped 2 points in October to 60.4, weaker than expected but still overall at relatively solid levels.”
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