EUR looks vulnerable after Eurogroup meeting
What happened overnight
– UK IP down 0.5%mom in August, as expected; trade data worse
– IMF cuts growth forecasts
Price action is mixed in currency markets this morning, with the AUD and ZAR regaining ground while the European currencies slip vs. the USD. Coming out of the Columbus Day weekend, the JPY and commodity bloc currencies have performed best since Friday’s close. EURUSD gradually gave back its post payroll gains over the course of Monday, with the pair sliding more sharply this morning in Europe to 1.2907 lows. The move lower follows an uneventful Eurogroup meeting Monday, which has seen Spanish 10-year yields back up about 12bp from their two week lows of 5.60% set early Monday. Equity markets were mixed in Asia, with Tokyo down 1% after a three-day weekend, but markets in Europe are stable and the S&P future is flat after losing 0.4% on Columbus Day. EURCHF jumped 0.3% higher to 1.2136 in response to a major financial institution announcing it would charge 0.25% on Swiss franc deposits with effect from 1 November.
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Credit Suisse