Europe Summary and Highlights 28 July
The USD gained ground across the board in the European morning.
European morning session
The USD gained ground across the board in the European morning. EUR/USD fell 75 pips to 1.1665, more than reversing the initial gains seen after the US/EU trade deal was announced at the weekend. USD/JPY gained 50 pips to 148.35, AUD/USD fell 40 pips to 0.6525, and USD/CAD gained 30 pips to 1.3730 The EUR was generally weaker on the European crosses, particularly against the GBP, with EUR/GBP falling 50 pips to 0.8695, but EUR was also down 0.1% against the CHF and 0.2% against the scandis.
EUR weakness reflects both the gains made in EUR/USD since the original announcement of tariffs in April, and the perceived unfavourable terms of the deal, with the UK deal appearing less onerous. Equities generally edged lower through the European morning after overnight gains, with yields also modestly lower.
Asia session
On late Sunday, it is announced the U.S. and EU have reached a trade agreement with a 15% reciprocal tariff. There is 0% tariffs on certain products from both the U.S. and EU, while the EU also pledged $600 billion in investment in the U.S.. Trump mentioned a purchase of $750 billion in energy. EUR/USD opened 14 pips stronger than Friday's close to 1.1754, with a spike to 1.1770 before trading 0.05% higher at 1.1746 now.
U.S. equities are upbeat on U.S.- EU deal. Risk sentiment is reacting positively against the deal and headline suggesting U.S.-China tariffs will be further delayed to facilitate negotiations. U.S. three major equity indexes opened higher and stay elevated while regional equities retraced earlier gains. AUD/USD is trading unchanged at 0.6566 after opening 8 pips higher than Friday's close, NZD/USD is trading 0.1% lower at 0.6010 while USD/CAD slips 0.04%. Else, USD/JPY is trading 0.08% higher at 147.77 as JGB yields underperform, GBP/USD is unchanged. Major currency pairs have closed their opening gap at least once in the Asia session.