Headlines:
- Dollar extends gains as post-Fed musings continue to play out
- ECB's Visco: Italy-Germany spread is still too high
- ECB's Lagarde: A recession won't be sufficient to tame inflation
- ECB's Panetta: We need to bring inflation back to 2% target as soon as possible
- ECB's Kazaks: Rates need to go "much higher"
- US October Challenger layoffs 33.84k vs 29.99k prior
- Switzerland October CPI +3.0% vs +3.2% y/y expected
- UK October final services PMI 48.8 vs 47.5 prelim
- Eurozone September unemployment rate 6.6% vs 6.6% expected
Markets:
- USD leads, GBP lags on the day
- European equities lower; S&P 500 futures down 0.9%
- US 10-year yields up 8.2 bps to 4.187%
- Gold down 1.1% to $1,617.01
- WTI crude diwb 1.5% to $88.67
- Bitcoin down 0.3% to $20,108
It was a rather straightforward session, in which markets focused on digesting the aftermath of the Fed policy decision yesterday.
Powell's hawkish message continued to reverberate and that saw the dollar pull higher, with broader market sentiment slumping as traders and investors stuck to the buy the dollar, sell everything else narrative again.
EUR/USD took a fall from 0.9820 to 0.9730 as the dollar ran hot in the session, with GBP/USD falling by over 1% from 1.1400 to 1.1230 as the pair loses altitude after having posted a solid run in the past two weeks. The BOE is in focus and could yet set off a further drop in cable, despite the already big move so far today.
Meanwhile, US futures pulled lower from a flattish start in European morning trade with S&P 500 futures now down 33 points, or 0.9%, as we look towards the Wall Street open later. That comes as Treasury yields also pull higher with 10-year yields up oer 8 bps to 4.187% on the day.
In turn, the mood is weighing on commodity currencies with the antipodeans bearing the brunt of the selling. AUD/USD is down a little over 1% from 0.6360 to 0.6280 while NZD/USD is also posting a similar size drop, down from 0.5830 to 0.5750 currently.
It looks like markets are reverting back to old habits and with the Fed not switching up the beat just yet, it is very much understandable. The US jobs report tomorrow will be another key risk event to see if the prevailing narrative will continue to go unimpeded before the weekend.
