Weak data weigh on European currencies
What happened overnight
– German, UK, and Norwegian October IP weaker than expected
– Bundesbank lowers growth forecast
– SNB data suggest no intervention in November
The USD is broadly firmer, with weaker European production data and Thursday’s dovish Draghi comments weighing on European currencies. EURUSD has extended Thursday’s retreat to test the 55-day moving average at 1.2915, consistent with Euribor implied yields continuing to edge lower. The CE3 and Nordic currencies are outperforming, while the commodity bloc is more stable, with AUDUSD holding above 1.0460 so far. Equity market price action is fairly neutral, with the S&P future and most European markets close to flat despite the Shanghai composite index extending Wednesday’s big bounce by another 1.6%. Peripheral spreads continue to rewiden gradually, with the Spanish 10-year yield up 6bp to 5.5%, up a bit more than 20bp on the week and about 25bp above the early week lows.
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