European Summary and Highlights 23 July
Focus is on the EUR into the July ECB meeting today.
Europe
The EUR remained choppy ahead of Thursday ECB meeting, with the EUR bulls looking for hints of a September rate hike (73% discounted). The bulls note that European gas prices have surged dramatically in the last week and this will make it difficult for the ECB not to hike in September. However, others are more mixed, feeling that the Iran/U.S. hostilities and energy prices could deescalate in the coming weeks.
Elsewhere, the focus remains on the risk of JPY intervention by the BOJ on USD/JPY given current high levels. Even so, some traders note that a hawkish Fed message at the July 29 FOMC meeting could boost the USD and counteract BOJ intervention in the coming days.
Asia Session
The Australian June Unemployment rate is steady at 4.4% but headline employment change is a huge beat at 76.3k with higher participation rate of 67%. Stronger part time growth than full time growth may take away some shine yet overall it is a very strong labor report. Aussie buyers are likely increasing their hawkish anticipation from the RBA and have sent the AUD/USD 0.27% higher at 0.7016. NZD/USD is trading 0.1% higher while USD/CAD slips 0.2% on up beat oil.
USD/JPY is little changed on Thursday with no fresh headlines for the pair. The Middle East situation persists and could persuade BoJ to hike earlier. Some market participants are anticipating another 25bps before year end 2026. USD/JPY is hugging the 163 figure to trade 0.02% lower at 163.10. Major equities are performining individually while precious metals soften. Else, EUR/USD is up 0.17% and GBP/USD is up 0.1%.