G10 central bank doves take flight
What happened overnight
– Riksbank kept rates on hold, in line with consensus, with dovish bias
– UK Q3 GDP surprises stronger than expected
– RBNZ was unchanged and less dovish than expected
– Singapore industrial production disappointed badly in September
Markets traded with a firmer tone overnight, with the USD down against all currencies except from the JPY. A report overnight suggesting the BOJ will further expand its asset purchase plan on 30 October was the catalyst behind the leg up in USDJPY to the day’s high of 80.21. The ZAR is the top performer of the day, supported by positive news on the strike resolution front. EURUSD is mildly supported on the day to a high of 1.3023, despite the weaker than expected M3 data. GBP is the other top performer of the day, on the back of a significantly stronger than expected Q3 GDP report. SEK is a touch stronger against USD and EUR, following the Riksbank decision to leave rates on hold, but with a dovish bias. This marks the third central bank in G10 this week, following the Bank of Canada and the RBNZ, to disappoint our expectations for a more dovish outcome.
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Credit Suisse