Europe Summary and Highlights 4 Jun
Dollar drifts off but market still defensive
Soft Swiss CPI; weak UK construction PMI
European morning session
Slight dollar drift-off from the latest Iran/ Lebanon news but the market proving reluctant to give up on a defensive mood. Oil off around -$1.5.
EUR/USD up a fraction from recent 1.16 support, continues tight ranging. Expiries today tending to play to the inertia.
USD/JPY sits off 160. Reuters BoJ sources report suggest a June rate hike, already implied by BoJ Ueda’s comments yesterday.
After a slow start, higher beta SEK does manage to grind out a bounce on the morning, USD/SEK -0.5%~
Swedish CPIF coming in above expectations at 1.5% (mkt 1.3%), albeit still below Riksbank thinking.
Swiss CPI soft again at 0.2%m/m (mkt 0.3%), just 0.6%y/y. EUR/CHF doesn’t hold onto a minor uptick.
Not a market focus but UK construction PMI notable, down to 38.2 from 40.2, weakest result in 6 years
EZ construction PMI modestly higher in May at 43.7 vs 41.7.
Asia session
U.S. announced that Israel and Lebanon have agreed to implement a ceasefire and establish security zones. However, it is conditional on a complete cessation of Hezbollah fire and the full evacuation of Hezbollah operatives from the south Litani sector, which has historical difficulties. The ceasefire looks set to be the prelude of a U.S.-Iran deal. USD/JPY is testing the 160 figure at 159.96.
Major equity indexes are performing individually as market participants are undecided about the latest development. While it is welcome news for a potential Israel-Lebanon ceasefire, it is always about Hezbollah, instead of Lebanon. Mostly have been anticipating a deal for weeks and seems to refuse on building further position on hollow headlines. AUD/USD is trading 0.04% higher at 0.7130. NZD/USD is trading 0.25% higher while USD/CAD rises 0.03% with oil lower. Else, EUR/USD is up 0.13% and GBP/USD is up 0.1%.