European Summary and Highlights 30 July

European morning session

The USD was generally slightly softer through the European morning, with EUR/USD gaining around 15 pips to 1.0835, and GBP/USD gaining around 10 pips to 1.2860. However, AUD/USD fell back 10 pips to 0.6545, and USD/JPY was also marginally higher. The NOK was the best performer, with EUR/NOK dropping 3 figures to 11.87.

Newswise, there was a set of mixed Eurozone data. Eurozone GDP was slightly stronger than expected, rising 0.3% q/q in Q2, but this came in spite of much weaker than expected German GDP which fell 0.1% q/q. CPI data was on the softer side, with Spanish CPI well below expectations at 2.9% y/y HICP basis, while German state CPI was broadly in line with consensus. The European Commission July survey was mixed, but generally not much changed from recent months.

Asia session

The USD/JPY is relatively steady on Tuesday Asia session as we wait for the BoJ decision. Our central forecast only sees the BoJ to reduce bond purchase by 1-1.3 trillion JPY, accelerating to 3 trillion in two years and we do not see the BoJ to hike rates at the same meeting given the current inflation picture and soft consumption. USD/JPY is recovering partial July losses to avoid getting wrong footed by BoJ again. The pair is trading 0.21% higher at 154.33 with U.S. Treasury yields outperforming JGB yields.

While major FX pairs are performing individually, the Kiwi is leading the pack against the USD to trade 0.26% higher at 0.5891. It does not seem to be affected by soft regional sentiment like the Aussie on Tuesday Asia. AUD/USD is only up 0.06% to 0.6553 while USD/CAD slipped 0.05% despite oil also slipping. Else, EUR/USD is up 0.02% and GBP/USD is down 0.06%.