North American Summary and Highlights 6 June
Overview - The EUR made modest gains after an expected 25bps ECB easing, though EUR/JPY ended lower. The USD was slightly softer, with US data coming in on the weak side of expectations.
North American session
EUR/USD bounced on the ECB decision, briefly reaching 1.09, with the 25bps rate cut fully discounted and markets noting a lack of forward guidance. However, with Lagarde confirming the earlier message from Lane that tighter policy is still feeding through and that real rates have risen the move above 1.09 was brief.
EUR/USD however remained above pre-ECB levels and with the USD generally softer into the afternoon a move back to near 1.09 was seen. EUR made modest gains versus GBP, CHF and SEK, but gains in EUR/NOK were erased.
US data was on the soft side, initial claims rising to 229k from 222k though possibly influenced by the Memorial Day holiday, and Q1 unit labor costs revised down to 4.0% from 4.7%. USD/JPY fell to near 155.50 from near 156.20 leaving EUR/JPY down on the day. AUD and CAD largely erased earlier losses seen versus the USD.
European morning session
The EUR was subdued ahead of the ECB meeting, drifting lower to 1.0865 with a 25bps cut in official rates fully discounted. Elsewhere, the JPY drifted lower in early European trading, as BOJ Ueda caution on further rate hikes took the edge off the JPY. Better risk sentiment in EM equities with the rebound in India, was also impacting sentiment though the USD was generally firmer, rising against AUD, CAD and GBP too.