FX round-up: Cable bounds back on better risk-apettite

Cable was among the best performers as risk aversion picked-up after the previous session´s slide, with that shift leading to a move lower in the US dollar despite some better than expected data on the economic front.

As of 1845 GMT the US dollar spot index was retreating 0.34% to 100.99. while the pound was up by 0.72% against the greenback to 1.2500 and versus the yen by 1.01% to 140.54.

Consumer credit in the UK increased by £1.6bn in October as expected, while mortgage approvals jumped from 63,594 in September to 67,518 for October (consensus: 65,000), surpassing economists´ projections.

Nevertheless, the key piece of news on Tuesday was a Reuters report citing four sources at the European Central Bank according to whom the ECB would step-in should the 4 December Italian referendum lead to dislocations in financial markets.

Those headlines drove euro/dollar up by 0.33% to 1.0642 while dollar/yen tacked on 0.28% to 112.41.

Also in the euro area, the European Commission’s headline economic sentiment index edged up to 106.5 in November from a revised 106.4 in October, missing economists’ expectations for a reading of 107.0.

However, separate data in France revealed that household consumption jumped by 0.9% month-on-month in October, far outpacing the 0.3% expected in markets.

Analysts at UniCredit said the figures pointed to a recovery in consumption during the fourth quarter, after they had broadly stagnated in the second and third quarters, although higher inflation at the start of the new year would likely weigh on spending.

Stateside, a second estimate for third quarter gross domestic product was revised higher from 2.9% to 3.2%, with household consumption now estimated to have expanded at a 2.8% pace, up from a preliminary estimate of 2.1%.

In parallel, the Conference Board´s gauge of consumer sentiment jumped back to pre-recession levels as did the S&P Case Shiller measures of US house prices.