EUR has seen modest strength in the European session, after comments from ECB’s Mersch, who downplayed what affect the recent attacks in Paris would have upon the French economy. He also declined to mention anything regarding further ECB easing and as such contributed to the bid seen in EUR, which retook the 1.0650 handle early in European trade and has held above it for the majority of the session. Of note, 563mln options for tomorrows NY cut reside at this level. This comes after two days of broad based weakness in EUR, with the possibility of further easing and a rate cut by the ECB in December in participants minds.
GBP has seen a bout of strength today in the wake of comments from BoE’s Broadbent, who avoided any dovish rhetoric and suggested that focus should not solely be on CPI forecasts or the shape of the curve. However, the risk event of the week comes in the form of FOMC minutes later this evening, as such GBP/USD pared gains in the latter stages of the session. As is usually the case with FOMC minutes, the significance of the report can be diminished given its dated nature, allied to the fact that a number of data points have been released since the actual meeting itself. The most notable of these was the NFP release for October, which showed that jobs rose by 271K. Given the strong NFP release, FFR futures are now pricing in a 66.0% chance of an increase in rates at the December meeting. Should the minutes from the meeting prior to this release be of a hawkish nature, this number could well increase.
Elsewhere in FX markets, CHF has seen a notable bout of weakness, with USD/CHF and EUR/CHF finishing the European session near highs. This came after the SNB’s Jordan made comments that the SNB could intervene in FX markets and that negative rates target an overvalued CHF.
Looking ahead, tomorrow sees the release UK retail sales, ECB meeting minutes, US weekly jobs data, Philadelphia Fed, BoJ Policy statement and Kuroda press conference, ECB's Coeure, Weidmann, Praet, Fed's Fischer and Lockhart and BoE’s Broadbent.