Europe Summary and Highlights 13 October
The USD and the riskier currencies made gains through the European morning as equity markets recovered from Friday’s dip triggered by Trump’s threat of increased tariffs on China.
European morning session
The USD and the riskier currencies made gains through the European morning as equity markets recovered from Friday’s dip triggered by Trump’s threat of increased tariffs on China. EUR/USD dropped 30 pips to 1.1590 while USD/JPY gained 40 pips to 1.52.20, but AUD/USD was little changed and the best performer through the morning was the NOK, with USD/NOK falling 3 figured to 10.07. GBP/USD and EUR/USD both dropped around 0.1%.
There was no data of note and little reaction to Sunday’s announcement of PM Lecornu’s new cabinet, which was little changed from his old cabinet. Notably, he reappointed Roland Lescure, a close ally of President Emmanuel Macron, as finance minister. The new government will face a vote of no confidence by the end of the week, and it remains unclear whether they have the support to survive.
Asia session
U.S. major equity indexes opened higher on TACO headline over the weekend. After his tough remark of 100% tariffs, Trump softened his stance over the weekend and revived market sentiment. Regional equities, on the other hand, had a terrible opening but calms as session progress despite still in the red. So far, we did not see a similar reaction form the Chinese front. AUD/USD opened 30 pips higher and is trading 0.82% higher from Friday's close at 0.6526, NZD/USD is trading 0.33% higher at 0.5739 (20 pips gap) while USD/CAD slips 0.1% with gap once being closed.
We have more update from the Japanese politic on Monday as Komeito suggest they don't rule out opposition party cooperation. While it is inevitable with the LDP coalition being minority in both houses, Komeito (coalition with LDP for the past years) signaling openness to co-operate with the opposing side is good news as they have previously stated that they may not work with the coming PM. USD/JPY is trading 0.49% higher at 151.86 after opening 60 pips higher from Friday's close. Else, EUR/USD and GBP/USD are unchanged from Friday close despite opening in favor of the USD.