Europe Summary and Highlights 3 Aug
European morning consolidates, digesting recent news and action
Europe
European morning largely digesting recent news and action, with a minor amount of consolidation after recent intraday oversold dollar action, but with the wider backdrop still being one of the market caught long dollars.
Japan money market data suggests Japan may have spent in order of $36 1/2bn on Friday’s intervention. Focus more of course on the implications of the confirmed joint nature of the last round and the drivers and implications of that.
Brent remains down around $4, slightly trimming the gap down, waiting to see how the regional brokered talks from today progress. NOK still the most responsive sessions to session.
US10s -5/6bp, S&P future + ½ %.
EZ Jul final manufacturing PMI 51.9 from 52 prelim.
Swiss Jul CPI 0.4% from 0.5%y/y, in line with market.
Asia Session
The confirmed U.S.-Japan joint intervention supports JPY as it could put a firm lid on USD/JPY rally. Short end JGB yields are also rising, with 2yr shooting past 1.5%. It indicates market participants are now anticipating a higher terminal rate from the BoJ. USD/JPY once sank to 155.28 before recouping partially losses to trade 0.68% lower at 156.541.
Vibrant weekend as we heard Trump saying Hormuz deal is done and joint intervention confirmed by U.S.-Japan. The credibility from Trump is questionable but we do have headlines on early Sunday suggesting a deal between Iran and Oman is close. It lead to a more than 5 USD/b drop in oil. U.S. equities are more upbeat than regional ones. AUD/USD is trading 0.07% higher, NZD/USD down 0.07% while USD/CAD rose 0.1%. Else, EUR/USD is up 0.08% and GBP/USD is down 0.06%. All opening gaps have been closed at least once.