European Summary and Highlights 28 Dec

Europe 
European trading saw a soft start for the USD, as sentiment and end of year flows kept the USD on the defensive.  However, consolidation kicked in by mid-morning after the Asian losses.  Traders do want to test 140.00 on USD/JPY and some feel that this could occur this week given recent momentum.  

While the main short-term focus is the Asia surge in the JPY, the USD also remains soft against European majors.  Once again USDCHF is moving ahead of EURUSD and GBPUSD, with EURCHF having dipped down to 0.9320 in Europe.  However, traders note that once end of year flows pass, that the USD could see a brief bounce in the New Year.  For the CHF, USD/CHF is key, as the supports on EUR/CHF are weaker than the key 0.8320 on USD/CHF.  

Asia Session
We are hearing more comments from Ueda reported by the Japanese media NHK. While he mentioned there was no hurry in unwinding ultra-loose monetary policy and the risk of inflation running well above 2% and accelerating was only small, market participants seems to be focusing on his comment that the chance of moving rates out of negative in 2024 is "not zero". He also shot down the idea of policy change in the January meeting, as we all know the BoJ is waiting for spring wage negotiation to confirm wage momentum. USD/JPY dipped 0.44% to 141.18 as USD is trading broadly softer despite U.S. Treasury Yields taking a breather.

Regional equities ex Japan is performing strongly and seems to have support the Antipodeans in early Asia. AUD/USD had reached a session high at 0.6871 before giving back all gains and fell by 0.04% to 0.6844, NZD/USD also retraced most of its gains and ending barely 5 pips higher at 0.6346. USD/CAD slip 0.05% to 1.32 with oil up half a dollar after a red Wednesday. Elsewhere, EUR/USD is up 0.09% and GBP/USD is up 0.12%.