European Summary and Highlights 6 August

European morning session

The JPY and USD gained ground through the European morning, reversing some of the recovery seen in the riskier currencies overnight, a equities slipped back after overnight gains. USD/JPY fell back below 145 after opening near 146, while EUR/USD fell to 1.0910 from an open near 1.0950. GBP was even weaker, with EUR/GBP up 15 pips to 0.8590, while AUD/USD fell back 30 pips to 0.6480. EUR/CHF slipped from 0.9380 to 0.9320.

There was little news of note. German factory orders were stronger than expected in June, rising 3.9% m/m, but the underlying trend is still weak. Swiss and Eurozone retail sales were both weaker than expected in June, as were French non-farm payrolls.

Asia session

The reversal in the market continues in the Asia session on Tuesday. While data is not the market moving part, we have a strong Labor Cash Earning from Japan that came in at +4.5% y/y, a level that will be much appreciated by the BoJ to reinforce their decision in July. Household spending is also seeing some improvement by 1.1% m/m even it is still down 1.4% y/y. All of such is in favor of BoJ's act to further tighten yet its magnitude need to follow through in the coming months. USD/JPY is trading 0.94% higher at 145.46 with both the U.S. Treasury and JGB yields higher.

Major equity indexes are seeing rebound with the Nikkei trying to recoup Monday's lost ground and is currently up 8.7%. U.S. three major equity indexes are up less than a percent. The RBA has kept cash rate at 4.35% as per forecast. While the latest CPI data show stubbornness, it lacks evidence such will continue or flare up and thus does not support a change of policy rate from the RBA. AUD/USD is trading 0.17% higher at 0.6507 after touching session high at 0.6540, NZD/USD fell 0.1% to 0.5933 while USD/CAD slipped 9 pips on slightly higher oil. Else, EUR/USD and GBP/USD are unchanged.