FX round-up: Cable moves slightly higher in risk-off trading

The US dollar weakened slightly versus the majors on Monday, retracing a tad of the sharp gains seen over the previous week.

A much softer than expected reading on US new home sales and lingering worries over the US debt ceiling which was looming ever closer may have contributed to the day's moves in the FX space. Nevertheless, traders were likely simply keeping their 'powder dry' ahead of Wednesday's US Fed meeting.

As of 17:44 BST cable was to be seen up by 0.32% to reach 1.5363.

That came despite dovish noises out of BoE Governor Carney. In remarks to the Mail on Sunday Carney said higher interest rates were “a possibility not a guarantee.”

Euro/dollar rose 0.29% to 1.1051.

Following on with the risk-off theme, dollar/yen continued to be trapped in the same range seen the China-induced bout of volatility which took markets by surprise in August.

The currency pair was to be seen drifting down by 0.27% to 121.05.

Figures on US new home sales out Stateside came in far weaker than projected, dropping by an oversized 11.5% month-on-month in September to an annualised rate of 468,000 (consensus: 549,000).

"Overall, looking through the month-to-month volatility, we still see new homes sales consistent with a moderate and sustained recovery in the housing market.

"Together, these data trimmed our estimate of real residential investment modestly and brought our Q3 GDP tracking estimate down one-tenth, to 1.2% after rounding," Barclays's Blerina Uruci said in a research note sent to clients.

The Israeli shekel moved 0.5% higher, registering its biggest increase since 15 October, to reach 3.8769 per dollar, after the country’s central bank opted to stay put on interest rates at its meeting on Monday.