European Summary and Highlights 06 June

The EUR has been subdued ahead of the ECB meeting, with a 25bps cut in official rates now fully discounted.  However, traders views vary, with some feeling that the cut will see a decline in Eurozone yields as the market shifts to discounting two further cuts in 2024 and this will hurt the EUR.  Others are more neutral to positive on the EUR reaction, feeling that President Lagarde will downplay visibility on future rate hikes.

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.