Europe Summary and Highlights 25 April

European morning session

The USD was mixed in a fairly quiet European morning session. EUR/USD and GBP/USD were both modestly firmer, but USD/JPY was little changed and the commodity currencies and scandis were weaker, with EUR/SEK showing the sharpest move, rising 8 figures to 11 without an obvious trigger. The CHF was slightly the best performer, with EUR/CF slipping a little lower, despite comments from SNB president Schlegel noting that the SNB could cut rates or use FX intervention to offset the impact of tariffs. 

Newswise, UK March retail sales early in the session came in stronger than expected, rising 0.4% m/m against a consensus of a 0.3% decline, although the February rise was revised down to 0.7% from 1.0%. There was no impact on GBP, in part because the strength was concentrated in clothing and footwear which was likely weather related, while the Q1 GDP data is already know to have been strong, and there is more concern about the latest weakness in survey data.

Asian session

The Japan April Tokyo CPI rose above 3% with headline at 3.5% y/y, with ex fresh food at 3.4% and ex fresh food & energy at 2% y/y. It is a jump from March and suggest the inflation picture remains choppy in Japan. The BoJ maybe caught between the rock and a hard place where they see hotter inflation and economic development negatively affected by the U.S. tariffs. USD/JPY is trading 0.74% higher at 143.62 as U.S. Treasury and JGB yields depressed.

The broad risk asset market is upbeat on Friday with China reported to be weighing exempting some US goods from tariffs as costs rise. It will be a good sign of a potential beginning of de-escalation since Trump increased the tariff on China to an exorbitant level. Regional equities are outperforming U.S. equities while all are in the green. AUD/USD is trading 0.02% lower at 0.6408, NZD/USD slipped 0.31% lower at 0.5978 while USD/CAD rose 0.14%. Else, EUR/USD is down 0.45% and GBP/USD is down 0.36%.