European Summary and Highlights 9 Apr

European morning session

A quiet European morning saw the USD edge a little lower across the board, but the riskier currencies outperformed, with AUD and GBP the best performers. AUD/USD gained around 15 pips to 0.6625. EUR/USD was only around 5 pips higher at 1.0865, while GBP outperformed, with EUR/GBP dipping 15 pips to 0.8567. USD/JPY and USD/CAD saw only modest declines.

The main news was the European bank lending survey. While there may be few positive straws in the wind in the latest (April) 2024 bank lending survey (BLS), the ECB should fund the balance of results still troubling.  Company credit demand slumped afresh amid rising interest rates and deferred capex plans.  There was a positive in a fall in credit standards for mortgage lending but this was almost exclusively a French rather than EZ-wide development and came alongside still falling demand (amid what are now falling EZ house prices).  There wasn’t much else of note, but late in the morning the US NFIB survey was released, showing a decline in optimism to new 11 year lows.

Asia session

D/JPY knocked on the next figure in early Asia as the USD is trading broadly stronger. Japan finance minister Suzuki says excess FX volatility is undesirable but does not say to be rushing towards an actual intervention, nor showing the market his urgency in curbing the JPY's weakness. U.S. Treasury Yields are softer across the curve while JGB yields rose and see USD/JPY retracing earlier gains to trade 0.06% higher at 151.87. 

Risk sentiment is generally positive on Tuesday with regional equities in Hong Kong and Japan performing, so as U.S. major equity indexes except Dow Jones and Chinese equities. Commodities are also performing well, which supported the Antipodeans against broad USD strength. AUD/USD is trading 0.06% higher at 0.6609, NZD/USD up 0.17% at 0.6042 while USD/CAD rose 0.04%. Else, EUR/USD is down 0.02% and GBP/USD is up 0.01%.