European Summary and Highlights 15 Feb

European morning session

GBP fell back through the European morning after weaker than expected UK GDP data. While the December decline of 0.1% was smaller than expected, revisions mean a 0.3% decline in Q4 – a larger decline than expected and confirming the H2 2023 recession. EUR/GBP gained around 20 pips to 0.8555. The December trade balances for the UK and the Eurozone were released, with the UK showing a slightly smaller than expected GBP14bn deficit and the Eurozone a smaller than expected 16.8bn surplus.

Otherwise, things were generally quiet with the USD around 0.1% softer across the board.

Asia session

On Thursday Asia session, the Q4 Japanese GDP has shown a disappointing -0.4% y/y contraction while it was expected to sprung back to growth of 1.4% y/y. It is contracting slower than the -2.9% in Q3 but still shows a soft private consumption, so as business investment. However, we do not see the poor Q4 GDP to affect BoJ's policy decision and we forecast Q1 2025 GDP to rebound.  U.S. Treasury and JGB yields all tread lower and see USD/JPY slipping 0.26% to 150.13.  

While the headline Australian employment change for Jan kept its foot in positive territory of 0.5K, the unemployment rate rose to 4.1% from 3.9% so as a huge negative revision in full time employment change from December. It seems to suggest the strength of Australian market maybe seeing a turn after peaking in early 2023 and feeling the effect of cumulative hikes. Yet, this report is very unlikely to change the path of cash rate for CPI remains the key focus. Supported by broadly positive risk sentiment, AUD/USD managed to retraced partial losses to trade 0.04% lower at 0.6488, NZD/USD slipped 0.02% to 0.6084 while USD/CAD rose 0.02% to 1.3542 as oil stay depressed. Elsewhere, EUR/USD is up 0.04% and GBP/USD is up 0.01%.