European Summary and Highlights 29 Feb
The USD and the EUR were both generally firmer through the European morning, USD/JPY recovered back above 150 after selling off in the Asian session, and AUD/USD fell back below 0.65 from an open near 0.6520.
European morning session
The USD and the EUR were both generally firmer through the European morning, USD/JPY recovered back above 150 after selling off in the Asian session, and AUD/USD fell back below 0.65 from an open near 0.6520. But EUR/USD was little changed near 1.0835, after making some gains early in the session, with the EUR also making gains on the crosses against GBP, CHF and scandis.
European inflation data during the morning was broadly in line with expectations. The French HICP was slightly higher than expected at 3.1% y/y, but Spanish HICP was in line at 2.9% y/y, and German state CPIs were generally consistent with the expected decline of the German national HICP to 2.7% in January from 3.1%. Other data included German retail sales, which were weaker than expected in January but saw some upward revisions to November that suggested the underlying trend is weak but steady. Swedish Q4 GDP was weaker than expected at -0.1% q/q, but Q3 was revised up to -0.1% from -0.3%, while Swiss GDP was stronger than expected at 0.3% q/q in Q4. UK money and credit data was mixed, with M4 weaker than expected, falling 0.1% m/m, with mortgage lending also falling again, while consumer credit and mortgage approvals were both stronger than expected.
Asia session
BOJ's Takata made a remark that momentum is rising in spring wage talks with many companies are offering higher-than-2023 wage hikes. He also highlights exit measures like abandoning yield curve control framework, ending negative rates, overshoot commitment. JPY rose as it is the first direct acknowledgment that achieving the 2% inflation target is becoming in sight and indirectly suggest a hike is imminent, at least bringing rates out of negative. USD/JPY dropped 0.58% to 149.81 on its mark with JGBs yield performing strongly.
Regional equities bounced strongly after opening lower with global equities in the green. After a slump on Wednesday, the Aussie is being supported by positive sentiment and broadly softer USD. AUD/USD is trading 0.34% higher at 0.6517, NZD/USD also 0.09% higher at 0.6103 while USD/CAD slipped 0.03% with oil up twenty something cent. Elsewhere, EUR/USD is 0.04% lower and GBP/USD up 0.04%.