Europe Summary and Highlights 28 March
The EUR fell back in the European morning as European data came out on the soft side.
European morning session
The EUR fell back in the European morning as European data came out on the soft side. Provisional French and Spanish CPI for March were both below expectations at 0.9% and 2.2% y/y respectively on an HICP basis. German unemployment also showed economic weakness, rising 26k in March and taking the unemployment rate up to 6.3%. Italian business and consumer confidence also slipped lower, as did Eurozone services sentiment in the EU Commission survey. EUR/USD fell from opening levels just below 1.08 to 1.0775.
GBP performed well through the session following much stronger than expected UK February CPI, which showed a rise of 1.0% m/m against a consensus 0.3% drop, following a similarly strong 1.4% rise in January. EUR/GBP continued this week’s decline, dropping a further 15 pips to 0.8320.
Otherwise, the USD was mixed, with USD/JPY dropping to a low of 150.35 before recovering the opening levels near 150.70, AUD/USD edging up to 0.6295, and USD/CAD rising to 1.4330. EUR/SEK traded up 3 figures to 10.83, while EUR/CHF slipped 10 pips lower to 0.9505
Asia session
Japan's Tokyo CPI stays elevated with headline at 2.9% y/y, ex fresh food 2.4% and ex fresh food & energy at 2.2%. The report does not only points toward transitory inflation, but also underlying inflationary pressure. The BoJ will be supported for their next hike, though the latest U.S. tariffs may affect their decision and make the BoJ to wait for more clarity on the scenario before acting. USD/JPY is down 0.13% to 150.83 with JGB yields falling faster than U.S. counterpart.
The broader risk atmosphere is sour on the last trading day as market participants reflect on the consequence from Trump's auto tariffs. The backdrop remains uncertain but it is reported that Carney and Trump will be talking over the weekend. Major equity indexes are all in the red. AUD/USD is down 0.31% to 0.6285, NZD/USD is down 0.45% to 0.5714 while USD/CAD rose 0.06%. Else, EUR/USD is down 0.11% and GBP/USD down 0.07%.