European Summary and Highlights 2 Apr

European morning session

A mixed session for the USD, with the riskier currencies gaining some ground while the CHF fell back. EUR/USD gained only around 10 pips, but AUD, GBP and CAD were stronger, rising 0.2-0.3%. USD/JPY was net little changed after some early losses, but USD/CHF gained 20 pips and EUR/CHF was up 30 pips to 0.9760.

Newswise, German state CPI data came in slightly below the published consensus, but probably in line with market expectations after the softer French and Italian CPI data seen on Friday. Eurozone and UK final March manufacturing PMI data was revised up, with the UK index rising above 50 for the first time since July 2022. UK money data was also on the strong side of expectations, with M4, mortgage approvals and lending and consumer credit all stronger than expected.

Asia session

As USD continue to perform strongly, USD/JPY is challenging recent high at 151.97. U.S. Treasury Yields jumped on Monday and has retraced partial gains so far on Tuesday's Asia session but JGB yields have erase Monday gains. Japan's Suzuki intervened verbally once again but has failed to inspire any JPY strength. It is no doubt we are getting closer and closer to an actual intervention yet instead of a specific level, the pace of rally will be the key factor for the intervention. USD/JPY is trading 0.07% higher at 151.74.

RBA minutes show there was no discussion of hiking the the March meeting. The forward guidance wordings were changed in the last meeting and continue to suggest data dependency as the driving factor for rate path. The current inflation figure does not support a rate decision change in the coming meeting. In sight of USD strength, "National Team" were seen selling USD/CNY to support Yuan.  Regional sentiment in Hong Kong is strong but not elsewhere. AUD/USD is trading unchanged at 0.6490, NZD/USD is down 0.14% to 0.5945 while USD/CAD rose 0.09%. Else, EUR/USD is down 0.09% and GBP/USD is down 0.05%.