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Nov 01 - 05:55 PM

EUR/USD - COMMENT-US Recap: EUR/USD Losses Limited By US Yield Dip On Data, Refunding

By Randolph Donney  —  Nov 01 - 03:15 PM

The dollar index rose 0.39% on Wednesday despite tumbling Treasury yields and after the Fed maintained its high-for-longer rates policy and Chair Jerome Powell said at this point there has been no discussion about rate cuts.

Before the Fed statement, the dollar had been up slightly more, but it faced resistance from USD/JPY's pullback as well as dovish reactions to mostly weaker-than-forecast U.S. data and Treasury refunding announcement that had sent Treasury yields lower ahead.

ADP came in at 113k, below the 150k forecast, and the combined September-October readings were the weakest since January 2021.
The ISM manufacturing unexpectedly fell much more deeply into contraction.
Both sets of data may have been affected by the UAW strike that has since been settled.

The JOLTS report showed the labor market tightened unexpectedly as job openings increased 56k and layoffs fell 165k to a 9-month low.

That came after Tuesday's NY Fed's MCTI data pointed to inflation being stickier than thought.

That may lead some to question whether the drop in Treasury yields was an overreaction, augmented by relief the Treasury's refunding announcement showed a slower pace of issuance increases.

USD/JPY's 0.47% fall started after Tuesday's post-BoJ meeting surge toward 2022's 151.94 32-year peak again came up short amid Japanese intervention warnings.
Its hefty 148.81-151.74 Monday-Tuesday rally offered a quick profit for dip-buyers in front of major hurdles and key event risks.

EUR/USD fell 0.3%, with Wednesday's low near last week's low and the lower 10-day Bolli, but under pressure regardless of the dive Treasury yields.
Earlier weakness followed downbeat Chinese manufacturing data -- a worry for the euro zone, particularly Germany, since it relies heavily on Chinese business.

Sterling fell 0.16%, continuing to linger near October's lows ahead of Thursday's BoE meeting that sees policymakers in a bind between UK inflation still at a frothy 6.7% and the economy showing signs of stress.

Aussie rose 0.7%, helped by higher equities.

Thursday brings Challenger layoffs, jobless claims, unit labor costs and durables orders before Friday jobs data and ISM non-manufacturing.

For more click on FXBUZ

Refinitiv IFR Research/Market Commentary


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