Europe Summary and Highlights 18 October

European morning session

GBP was the only real mover in the European morning, with EUR/GBP dropping below 0.83 for the first time since April 2022 in response to stronger than expected UK retail sales data for September. Although the data only showed a modest 0.3% m/m increase, this compared to a consensus of a 0.3% decline, and follower 1.0% and 0.7% increases in the previous two months, so that the 3m/3m trend was the strongest since the pandemic. EUR/GBP hit a low of 08295 before bouncing to 0.8315.

Otherwise, most pairs were little changed through the session, although there were some modest gains for the scandis and the CHF was slightly weaker. Other than the UK data there were Eurozone current account numbers for August which showed a smaller than expected surplus of EUR31.5bn.

Asia Session

The September National CPI has shown moderation from August at 2.5% y/y, ex fresh food 2.4% y/y while ex fresh food & energy rose to 2.1% y/y. The BoJ would still be happy to see this as all three items remain above 2% with ex fresh food and energy (non-transitory) items also higher, which seems to support their argument of stronger trend inflation. As USD/JPY moves past 150 figure, we began to hear verbal intervention from the Japanese government. Mimura, the vice finance minister for Japan says recent yen moves are rapid and one sided, the same old rhetoric in verbal intervention. USD/JPY dropped 0.21% to 149.88.

The Chinese Q3 GDP came in at 4.6% y/y but it comes with Q2 quarterly growth revision. Retail sales and industrial production for September both came in stronger. Regional sentiment is mixed with HK and Japanese equity indexes in the green and Chinese equity index little changed initially but improved after the PBoC launched its relenting facility to help listed firm for repurchase and increase share holding. AUD/USD is trading 0.12% higher at 0.6704, NZD/USD is 0.04% higher while USD/CAD is unchanged. Else, EUR/USD and GBP/USD is up 0.1%.