Europe Summary and Highlights 21 January
The USD was generally stronger through the European morning session, except against the CAD and AUD, which held their own.
European morning session
The USD was generally stronger through the European morning session, except against the CAD and AUD, which held their own. EUR/USD dropped around 20 pips to 1.0350, and USD/JPY rose 40 pips to 155.90.
The main news of the morning was the UK labour market data, but this came in essentially in line with expectations. The official ONS average earnings data showed a rise in the 3m y/y rate of growth to 5.6% in November, but the more up to date HMRC payroll data showed a decline to 5.6% m/m in December from 6.4% in November. The ONS employment data showed modest employment growth, but the HMRC data showed a second consecutive month of declining employment in December. GBP wasn’t much changed on the data, but EUR/GBP finished the session marginally lower at 0.8450.
Asia session
A vibrant start for Tuesday as we began to hear the barrage of executive order from Trump. While none has been directly related to tariff yet, Trump is floating the idea of 25% tariff on Canada and Mexico on February 1, a percentage that seems to be higher than previously anticipated. The Loonie is getting smashed and see USD/CAD jumped to 1.4518 before retracing a tad to 1.4431, still up 0.86% higher. U.S. equities are trading lower but off session low while regional equities are in the green. AUD/USD is down 0.43% to 0.6247 and NZD/USD is down 0.31% to 0.5654.
While all eyes remains on Trump's executive orders, the BoJ decision this week is not to be over looked. So far, we have not heard any "leaks" and market continue to price in a high chance for a BoJ hike, at least 10bps. We believe the surprise lies in the downside as BoJ has not been acting as hawkish as they spoke. USD/JPY is trading0.31% lower at 155.13 as both the U.S. Treasury and JGB yields slide. Else, EUR/USD down 0.26% and GBP/USD is down 0.25% with both off session lows.