Europe Summary and Highlights 24 July
The USD has run into some profit-taking in Europe after a good run over the past couple of days, with traders reporting some profit-taking.
Europe
Nevertheless, the USD mood against European currencies remain constructive, with market fears of Fed rate hikes intensifying with the surge in energy prices – Trump new 301 tariffs are also seen adding to the inflation picture. The bias is to test 1.1275 into next week, depending on the tone of the July 29 FOMC meeting.
USD/JPY also ran into profit-taking, but traders are split. Some see scope to 165 on Fed tightening fears and high energy prices. Other are concerned about BOJ FX intervention and a squeeze on JPY shorts, especially with the U.S. Treasury pressing for more BOJ rate hikes overnight to curtail JPY weakness – speculating is growing of an October BOJ hike by 25bps.
Asia Session
As we fast approach the end of week, market participants are careful not to place their bets aggressively to avoid weekend risk. There seems to be little de-escalation potential for now as Trump seems to be disappointed by the previous deal collapsing. The greenback has moved much, so as USD/JPY trading unchanged at 163.83.
Major equity indexes are turning sour as session progress. The latest headline suggested Iran had rejected a ceasefire deal from the U.S., seems to indicate more cross fire over the weekend. Precious metals are also soft for the session. AUD/USD is trading 0.14% higher at 0.6978. NZD/USD is trading 0.06% higher while USD/CAD unchanged. Else, EUR/USD is up 0.04% and GBP/USD is down 0.03%.