Forex news from the European trading session - 22 October 2021
Headlines:
- Eurozone inflation expectations hit 2% for the first time since 2014
- Evergrande main unit says cannot guarantee that financial obligations will continue to be met
- UK October flash services PMI 58.0 vs 54.5 expected
- Eurozone October flash services PMI 54.7 vs 55.5 expected
- Germany October flash manufacturing PMI 58.2 vs 56.5 expected
- France October flash services PMI 56.6 vs 55.5 expected
- Evergrande makes bond payment but be mindful that there are other names in a tough spot too
- UK September retail sales -0.2% vs +0.5% m/m expected
- ICYMI: Australia to start quarantine-free travel bubble with Singapore soon
Markets:
- AUD leads, GBP lags on the day
- European equities higher; S&P 500 futures up 0.1%
- US 10-year yields up 0.5 bps to 1.68%
- Gold up 0.6% to $1,792.40
- WTI up 0.7% to $83.07
- Bitcoin up 1.2% to $63,431
There wasn't a whole lot going on in European trading today but there are a couple of decent moves all things considered, even with the lack of key headlines.
Euro area PMI data reaffirmed a slowdown in the recovery going into Q4 amid supply bottlenecks and rising inflation pressures, with a similar sentiment seen in the UK too.
Evergrande reportedly making a bond repayment a couple of days before its 23 October due date helped to lift the risk mood early on in Asia trading and while the optimism faded a little going into Europe, we're seeing equities push higher again now.
European indices are holding modest gains around 0.5% to 1.0% while S&P 500 futures are now up 0.1% from being down around 0.3% earlier on.
Tech is still the laggard though as Snap shares prove to be a drag on sentiment after a disappointing earnings outlook after the close overnight.
The dollar is a touch softer with EUR/USD moving up from 1.1625 to 1.1640 while USD/JPY eased from 114.00 to 113.80 even as Treasury yields stay elevated. That said, 10-year yields are down from the highs of 1.70% yesterday to 1.68% currently.
Commodity currencies are among the notable gainers with USD/CAD easing from 1.2350 to 1.2325 as oil prices also pull higher on the day. The aussie is the lead gainer with AUD/USD testing waters above 0.7500, looking to erase the drop yesterday.
The inflation focus continues to be a key theme in the market, with Eurozone inflation expectations exceeding 2% for the first time since 2014. That will certainly keep things interesting ahead of the ECB (BOJ and BOC too) meetings next week.
