Forex news from the European trading session - 3 November 2021
Headlines:
- ECB's de Cos: Forward guidance does not support market view on rate hikes next year
- ECB's de Cos: Inflation surge is transitory but could be more persistent than initially estimated
- US MBA mortgage applications w.e. 29 October -3.3% vs +0.3% prior
- ECB's Lagarde: Outlook for inflation over medium-term remains subdued
- ECB's Muller: Inflation surge is largely transitory
- UK October final services PMI 59.1 vs 58.0 prelim
- Bond yields continue to pull back ahead of the Fed later today
- PBOC says that 140 million people have opened accounts for digital yuan
- UK October Nationwide house prices +0.7% vs +0.4% m/m expected
Markets:
- NZD leads, CAD lags on the day
- European equities mixed; S&P 500 futures down 0.1%
- US 10-year yields down 1.6 bps to 1.531%
- Gold down 0.1% to $1,784.70
- WTI down 2.2% to $82.10
- Bitcoin down 0.1% to $63,064
It was a quiet session for the most part with some mixed moves in the market as we gear towards the FOMC meeting later today.
Bond yields were once again on the retreat, falling in European morning trade even before the ECB chimed in and pushed back on rate expectations.
German 10-year bund yields slipped to -0.19% - its lowest since mid-October, extending yesterday's fall while 10-year Treasury yields are also down 1.6 bps to near 1.53%.
The pullback in yields also saw ECB rate hike bets recede, with a 10 bps hike now pinned for December 2022 from October 2022 before this.
In FX, the dollar is mixed but mostly a little lower with USD/JPY holding around 113.75-85 as yields look a little heavier. EUR/USD moved up a little from 1.1585 to just below 1.1600 while AUD/USD kept a slight advance around 0.7440-50 for the most part.
The overall changes are light with equities also not offering much help in terms of risk sentiment, keeping more cautious and guarded in anticipation of the Fed.
It's all about the FOMC meeting today but before that we'll get ADP employment data to digest, not forgetting that it is non-farm payrolls week too.
