European Summary and Highlights 05 Mar

European morning session

A very quiet European morning session saw EUR/USD oscillate around 1.0850 and USD/JPY hold close to 150.40. AUD managed a modest recovery from overnight losses, and EUR/NOK also slipped around 3 figures lower, while EUR/CHF continued to edge higher.

There was little market moving news. Datawise, we saw weak French industrial production, down 1.1% in January against a consensus of a 0.1% decline. Eurozone services and composite PMIs were revised a little higher, with the composite up to 49.2 from 48.9 originally reported. UK revisions went the other way, with the composite down to 53.0 from 53.3. Eurozone PPI was weaker than expected, down 0.9% m/m against a consensus of -0.1%.

Asia session

Following a dip below 2% in January, the Japanese Tokyo CPi rebounded in February. Headline y/y CPI came in at 2.6% from prior 1.8%, ex-Fresh Food 2.5% from prior 1.8% and ex Fresh Food & Energy 3.1% from prior 3.3%. Both the headline and ex fresh food see a significant rebound while ex fresh food and energy continues to moderate. The data echoes our forecast to see a rebound in Q1 2024 before further moderation throughout the year. While in a short run, the data may affect sentiment, the key factor remains in labor cash earning to see a sustainable trend. Thus, USD/JPY sees little impact and is trading 0.02% lower at 150.48 and a small range for this Asia session as both U.S. Treasury and JGB yields slip. 

Reuters reported China will target around 5% 2024 GDP growth in their work report, which is a similar target for 2023. However, the budget deficit is targeted to be lower in 2024 than 2023 and the proposed stimulus does not seem to be enough to bring the Chinese economy out from current turmoil. Regional sentiment is not impressed with SSE barely in the green with "National Team"'s buying sighted and HSI dropping close to 3%. The soft sentiment dragged AUD/USD down 0.28% to 0.6491 and NZD/USD down 0.19% to 0.6082 while USD/CAD rose 0.08% on softer oil. Elsewhere, EUR/USD is down 0.04% and GBP/USD is down 0.06%.