Trump rules out Iran strikes before midterms; yields back off 2002 highs

Oil jumped and the 10-year Treasury yield climbed back toward its highest since 2002 on Thursday. Yields had been easing since the US morning when President Trump said, in a post FXStreet reported at 16:42 UTC, that the US would not attack Iran before the midterm elections; FXStreet tied the dollar's late selling to his comments and the pullback in crude that followed, and after the close had the 10-year ending near 5.22%. Fed Governor Waller called for more hikes, just not at consecutive meetings.

Oil, yields and Trump

• WTI rushed above $90.00 in the European morning on reports of new Houthi attacks on Saudi airports, FXStreet said. investingLive's European wrap had WTI up 4.1% at $92.60 and the 10-year yield up 6 basis points at 5.345%, and Action Forex said Brent briefly pushed above $105 on renewed reports of possible US military action against Iran. WTI still ended the day up nearly 2.5%, FXStreet said after the close.

• Early in the session FXStreet had cited Axios reporting that the Pentagon told Central Command to finish preparations for resuming combat in Iran. At 16:42 UTC Trump said the US would not attack Iran before the midterms, FXStreet reported, and the dollar abandoned the area of its recent tops in response to his comments and the pullback in crude that followed. After the close, FXStreet had the 10-year yield ending near 5.22%, and cited the New York Times saying Trump had ordered plans for three days of strikes all the same. On our feed, USD/JPY and USD/CHF both made their lows of the day at 17:28 UTC.

Waller and the Fed

• The Federal Reserve's Christopher Waller said in Istanbul that more rate hikes are needed while inflation remains too high, but that they need not come at consecutive meetings, FXStreet reported; Action Forex summed it up as "pause is not pivot". That is what our weekly wrap said markets had done, "took October off the Fed's table, not rate hikes", and after the close FXStreet said hike bets had shifted to December. St. Louis Fed President Musalem said more firming will be required, FXStreet reported.

• US weekly jobless claims came in at 197,000 against 200,000 expected, according to investingLive's Americas wrap.

The euro, the pound and the franc

• EUR/USD fell to 1.11718 at 11:37 UTC on our feed, below the 1.1185 Action Forex had flagged, then closed at 1.12111, up 0.13%.

• The accounts of the European Central Bank's September meeting showed every member saw the risks to the inflation outlook as tilted to the upside, FXStreet said.

• Bank of England Governor Bailey said financial markets need to be better prepared for future shocks and that policy must stay focused on returning inflation to target, FXStreet said. External member Greene warned in Cape Town that it is dangerous to assume markets will do the BoE's work, and FXStreet noted she has voted for a hike at each of the last three meetings. The pound bottomed at 1.31843 against the dollar, keeping every session's low since 24 September within half a cent of 1.3200, and closed at 1.32286.

• EUR/GBP, on the back foot for a tenth day by midday according to FXStreet, closed at 0.84739, a hair above Wednesday's 0.84732, so its run of lower closes stopped at nine.

• The Swiss franc lost ground against the dollar for a fourth day in the European morning, FXStreet said, after the Swiss National Bank's vice chairman ruled out a change in policy. It turned later: USD/CHF closed at 0.83163, down 0.20%, and after the close FXStreet described safe-haven flows moving from the dollar to the yen and the franc.

Gold

• Gold traded around $4,110 in early Asian hours, near two-month lows, and closed at $4,133.11 on our feed, up 0.8%, with a high of $4,145.97, still short of the $4,200 our weekly wrap named. FXStreet credited lower Treasury yields, a weaker dollar and geopolitics.

Market gauges and what's next

Our proprietary metrics at the close of the session:

• Readings: an MRS of 69 for a sixth session in a row, a CTS of 54 with its carry backdrop at 60, and an FSI of 58, Neutral, from 59.

• Top of our strength table: the US dollar, on top for 277 of the session's 1,438 minutes, 19% of them, ahead of the Australian dollar on 246.

• Bottom: no currency clearly trailed. The dollar itself spent the most minutes in last place, 17% of them, so it sat at both ends of the table.

• The dollar: the table counts minutes in each place, not the session's net move, which is how the dollar could top it on a day it ended lower against most majors. The euro, on top on Wednesday, led for just 89 minutes, the fewest of the eight.

• Last week's test: EUR/USD closed below 1.1215, the level our weekly wrap set, for a second session. It traded as high as 1.12268 at 14:35 UTC, and back above the level after Trump's post and in the final hour, but closed below it.

Still ahead: Canada's jobs report, flagged in our weekly wrap, is due at 12:30 UTC (forecast +6,100 jobs after −41,700, with unemployment at 6.5% from 6.4%), and the University of Michigan's preliminary consumer sentiment follows at 14:00 UTC (forecast 47.5, previous 47.8).