European Summary and Highlights 26 July

European morning session

USD/JPY gained around 60 pips to 154.20 through the European morning as equity markets extended the recovery that started on Thursday afternoon. EUR/CHF was also firmer, rising 20 pips to 0.9585, but most other pairs were little changed, although the more risk positive currencies were marginally firmer.

There wasn’t much news of any note. Swedish unemployment data showed the seasonally adjusted unemployment rate unchanged at 8.2%. Norwegian retail sales fell sharply by 5.1% in June, but this followed a 4.7% rise in May so the data was clearly seasonally impacted.

Asia session

While it is a "relatively" steady Asia session this week, USD/JPY still have a range of almost 80 pips volatility in early Asia. Tokyo July Headline CPI came in at 2.2% y/y, ex fresh food 2.2% and ex fresh food & energy 1.5%. It continues to be hovering around BoJ's 2% target and the lack of heat may erode support for BoJ's further tightening. It aligns with our central forecast of BoJ's taking one step at a time in the meeting next week, only reduce bond purchase but no rate changes. USD/JPY is trading 0.09% lower at 153.76 with both U.S. Treasury and JGB yields little changed.

Global risk sentiment is steadier with minor relieve for U.S. three major equity indexes and Nikkei, Chinese and Hong Kong equity indexes are in in the red. USD is broadly lower. The Aussie capitalized on that and see AUD/USD up 0.24% to 0.6553, NZD/USD gained less and is up 2 pips while USD/CAD slipped 0.09% as oil also up a few cents. Else, EUR/USD up 0.11% and GBP/USD up 0.1%.