North American Summary and Highlights 6 February
Overview - GBP slipped on a 25bps BoE easing but subsequently recovered. The USD made gains against EUR and GBP ahead of the BoE decision but was generally softer in North America.
North American session
The Bank of England eased by 25bps as expected but with two dovish dissents. GBP/USD slipped to a low of 1.2361 while EUR/GBP bounced to a high of .8378 from .8340. However, the moves were gradually erased, with GBP/USD edging higher in a weaker USD environment. EUR/USD gains were modest, stalling ahead of 1.04, leaving EUR/GBP near .8350. USD/JPY fell almost a big figure to trade below 151.50, while USD/CAD tested 1.43 before a modest correction. AUD/CAD was fairly stable after peaking at .90, with AUD/USD up to .6280.
US data had little impact. Initial claims bounced to a still low 219k from 208k. Q4 non-farm productivity was on consensus at 1.2% but unit labor costs at 3.0% were slightly softer than expectations.
European morning session
GBP and the EUR were weaker through the European morning. GBP/USD lost 80 pips, falling to 1.2410 ahead of the BoE MPC meeting, while EUR/USD fell 30 pips to 1.0360, still gaining some ground against the pound. The CHF also follower the EUR lower, but most other USD pairs were not much changed, although USD/CAD was slightly higher.
There was stronger than expected Swedish CPI data early in the session. This showed a sharp rise in the targeted CPIF measure in the flash January data to 2.2% against a market consensus of 1.6%, and triggered a 4 figure EUR/SEK decline to 11.31, although there was a mild retracement by the end of the session. German December factory orders were also stronger than expected, rising 6.9% after a 5.4% decline in November, but this had no market impact.