Europe Summary and Highlights 17 December

European morning session

GBP was stronger through the European morning session, rising on the back of stronger than expected UK labour market data. UK average earnings growth came in at 5.2% y/y in the 3 months to October, up from 4.4% in the previous 3 months and well above market expectations. The more up to date HMRC data on payrolled employees showed earnings growth at 6.3% y/y in November. However, the HMRC data continues to show a trend decline in employment, while the ONS data showed a 173k rise in employment in the 4 3 months to October. Nevertheless, the data was stronger than expected and pushed UK 2 year yields up 10bps, and EUR/GBP down around 30 pips to 0.8260 by the end of the morning.

EUR/USD was a little weaker on the morning, falling back a net 10 pips helped by a weaker than expected December IFO survey. The business climate index hit its lowest since the pandemic, driven by a decline in expectations. AUD, CAD, scandis and CHF also all fell back against the USD, but USD/JPY dropped around 25 pips to 153.75.

Asia session

We had comment from Japan economy minister Akazawa reiterates BoJ will conduct monetary policy appropriately, which means little after earlier "leak" last week suggest the BoJ is tilted towards on hold or at least what market participants are perceiving. Still, no one would like to be caught wrong footed and seems to have driven to a consolidation in USD/JPY on Tuesday. USD/JPY is holding onto the 154 figure to trade unchanged at 154.09.

Australia consumer confidence continues to contract and points toward a soft private consumption in the coming data release. Regional sentiment is also soft while U.S. equities outperform. AUD/USD is down 0.25% to 0.6354, NZD/USD also down 0.25% while USD/CAD is up 0.14% as oil soft. Else, EUR/USD is down 0.02% and GBP/USD is down 0.04%.