Europe Summary and Highlights 20 Jan
The USD was generally weaker through the European morning, as equities fell back on concerns around Greenland.
European morning session
The USD was generally weaker through the European morning, as equities fell back on concerns around Greenland. EUR/USD gained half a figure to 1.1725, while the CHF was the best performer, with EUR/CHF dropping 30 pips to 0.9260. The EUR was otherwise generally higher on the crosses, except against the SEK with EUR/SEK little changed.
EUR/JPY made strong gains in early Europe/late Asia, as the JPY suffered from concerns around the snap Japanese election called for February 8 and potentially easier fiscal policy. JPY declines came in tandem with sharp rises in JGB yields.
GBP initially gained a little ground against the EUR early in the session after UK labour market data, although the data was broadly in line with consensus, with average earnings growth easing slightly to 4.5% y/y in the 3 months to November (excluding bonuses). However, GBP gains proved short-lived, and EUR/GBP finished the session up a net 15 pips to 0.87.
Asia session
10yr JGB yields continue to search for higher levels as snap election in February and potentially more stimulus hurt market participants' confidence. 10yr JGB yields are now at level not seen in two decades, so as 2yr yields. The rapid movement could trigger a change to BoJ's bond purchase program, where they are expected to be discussed in the coming meeting. USD/JPY is trading unchanged at 158.13.
The December PSI for New Zealand has entered expansionary area after 21 months of contraction. The strong headline number is encouraging and seems to allow market optimism to build on domestic growth. NZD/USD is trading 0.6% higher at 0.5833. AUD/USD is also trading 0.34% higher on stronger metal while USD/CAD slips 0.14%. Else, EUR/USD is up 0.18% and GBP/USD is up 0.13%.