[MARKET ANALYSIS] G10s are broadly firmer against the USD into NFP; havens lead on narrowing yield differentials

G10s are broadly firmer against the USD, which has been pressured alongside downside in yields and pressure in the energy complex. That was facilitated by reports that France has proposed plans to release 50mln barrels of diesel from Europe (vs the US request of 120mln over 180 days), and perhaps more pertinently 50mln barrels of crude oil across IEA members – this would include the US. Given the recent pressure in yields, the index is under mild pressure this morning and currently holds towards the lower end of a 101.79 to 102.13 range – but still around the prior day’s peak. A material bout of pressure for the USD would likely require significant progress between US-Iran and/or confirmation of a crude stock release. Bar that, the index will likely trade tentatively around the current range as markets await US NFP later today. The US economy is expected to add 90k nonfarm payrolls in September. Analysts note that the August data, where 162k payroll additions were reported, may have been subject to favourable seasonal adjustments, and will be watching to see if the data is revised lower in September. The unemployment rate is expected to hold at 4.1%, an expectation supported by the Chicago Fed’s flash real-time unemployment rate forecast. (A full preview can be found in the Newsquawk Research Suite). CHF is the outperformer across G10s this morning, extending on recent gains. There appears to be a bit of an unwind of the recent carry trade that the CHF was subject to, with net positioning of long-shorts at c. -16.45k over the past 3 months. Further helping is some haven-related demand stemming from the French fiscal situation. Elsewhere, JPY also holds towards the top of the G10 pile, also buoyed by the yield situation. Domestically, Tokyo CPI accelerated in September, and broadly topped expectations. A report which will no doubt boost calls for the BoJ to hike; it seems like the BoJ is now dealing with waning sentiment across Japanese businesses (evidenced in the latest Tankan survey), and rising inflation in a key leading indicator. EUR is a touch firmer this morning, with focus ultimately on the region’s inflation report. Headline Y/Y printed at 3.8% (exp. 3.6%, prev. 3.2%), and Services also rose from the prior. Pertinently, Core HICP moved only a touch higher to 2.2% (prev. 2.1%), which will be welcomed for policymakers, since there is still little evidence of second-round effects. Nonetheless, woes of rising inflation remain – and this data will only further cement calls for another hike later this year.