Europe Summary and Highlights 18 May
Mkts take a breather after Fri moves, dollar pairs consolidate off support test
G7 underway, watching headlines but not expecting much
European morning session
Consolidation of Friday’s moves, with EUR/USD seeing modest bounce after o/s test of 1.16, and similar breathers across most other pairs, cable +0.3% on the day. AUD/USD also lifting off the overnight extension to just shy of 0.71. DXY also trims a touch after a week of gains, though not breaking the uptrend. Risk markets also having some consolidative respite on the morning, copper trimming losses, Dax holding just above flat - though Asia regionals remained still soft overnight and BRL for example is the latest pair to see a bit of a correction.
Not much new on the UK politics front, as the wheels are largely in motion now. Deputy PM says Starmer not lay out timetable to quit.
G7 meeting today and tomorrow, not expected to yield much but to be watched for headlines.
Asia session
Far end JGB yields are jumping higher on Monday as market participants' fear on the fiscal position of Japan. The latest round of fear is triggered by new budget suggested from Japanese officials to finance another round of energy stimulus to cushion the prolonged oil shock. Both 10yr and 30yr JGB yields have jumped more than 10% since the beginning of last week. USD/JPY is trading 0.12% higher at 158.90.
Broader market sentiment remain sour as there is no sign of a quick fix in Strait of Hormuz. Over the weekend, the strike of UAE's nuclear energy facilities are suggesting that Iran believe firmly in their leverage and will unlikely to yield. Major equity indexes are all in the red while Gold recovered from early losses. AUD/USD is trading 0.21% lower at 0.7133. NZD/USD is unchanged while USD/CAD rises 0.03% with both Brent and WTI up more than a dollar/b. Else, EUR/USD is down 0.04% and GBP/USD is down 0.01%.