UK political chaos continues.

US housing starts declined to an annual rate of 1.44mn for September from a revised 1.57mn and below consensus forecasts of 1.48mn, but building permits edged higher to 1.56mn from 1.54mn which was slightly above market expectations of 1.53mn.

Although the US data was mixed, there was sharp selling in US Treasuries with the 10-year yield increasing to a fresh 14-year high above 4.10% amid expectations that the Federal Reserve would have to be even more aggressive in tightening monetary policy.

The 10-year yield increased further to 4.15% on Thursday.

The dollar overall maintained a strong tone and USD/JPY challenged the 150.00 level, but with some reluctance to push the US currency above this level given the persistent intervention threat.

UK Home Secretary Braverman resigned on Wednesday. Although officially it was due a break of the ministerial code, there was also very strong criticism of government policy and an open call for Prime Minister Truss to resign. The government overall remained in total chaos and close to collapse.

The headline Canadian CPI inflation rate edged lower to 6.9% for September from 7.0% previously, but slightly above consensus forecasts of 6.8%.

The core rate edged higher to 6.0% from 5.8% while Bank of Canada core rates were little changed.

Australia reported an employment increase of just below 1,000 for September compared with expectations of a 25,000 increase while the unemployment rate held at 3.5%.

The Euro was unable to make any headway on Wednesday and lost ground as global risk appetite deteriorated. Underlying confidence in the Euro-Zone outlook remained very fragile. Higher yields boosted the dollar across major currencies. Weaker equity markets also triggered some defensive dollar support.

EUR/USD lost further ground after a break below 0.9800 with lows below 0.9760. EUR/USD did edge higher to 0.9785 on Thursday.

The yen was again undermined by higher US yields. USD/JPY posted fresh 32-year highs near 150.00 and traded close to this level on Thursday. Higher global US yields also undermined the Swiss franc. EUR/CHF edged to 6-week highs above 0.9800 with USD/CHF posting strong gains to 1.0050.

Sterling lost ground with an underlying lack of confidence in UK fundamentals. Weaker risk appetite also curbed Sterling support during the day. GBP/USD dipped sharply to lows below 1.1200 before creeping back above this level on Thursday.

Commodity currencies lost ground as equities came under pressure. AUD/USD dipped to lows near 0.6250 in US trading on Wednesday. AUD/USD also dipped after the domestic employment data before a recovery to 0.6265. USD/CAD strengthened to highs just above 1.3800 before a retreat to 1.3755.

Economic Calendar

13:30Philly Fed Manufacturing Index-5.0-9.9

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