Europe Summary and Highlights 21 November

European morning session

USD/JPY dropped half a figure, EUR/USD lost 20 pips and AUD/USD lost 15 pips through the European morning. GBP and CHF were unchanged against the EUR, but scandis were lower, with EUR/SEK and EUR/NOK both gaining around 3 figures.

JPY strength looked to be a continuation of the correction seen in Asia which was triggered by the sell off in equities on Thursday and he comments from Finance minister Katayama in early Asia specifically threatening intervention. Equities bounced a little in Europe but the FX risk tone remained negative.

The morning saw preliminary November PMI data for the Eurozone and the UK. The Eurozone composite PMI was slightly weaker than expected, but the UK PMI fell more significantly due to weakness in services. UK retail sales for October were also weaker than expected, falling 1.1% m/m, but despite an initial dip in GBP, EUR/GBP was unchanged on the morning.

Asia session

All three item of the November National CPI for Japan is above 3%, with ex fresh food & energy at 3.1%. The inflationary picture continues to be supportive for another rate hike from the BoJ as underlying inflation remains stubborn. Governor Ueda has made his stance clear by suggesting inflation target has been sustainably met. But the political resistance from PM Takaichi may induce the BoJ to water down, again, by suggesting more confirmation from the next spring wage negotiation. USD/JPY is trading 0.15% lower at 157.20.

Regional equities are following the overnight momentum to slump lower. U.S. major equity indexes are trying to claw back some gains but have not witnessed any trigger for a huge bounce yet. USD is trading broadly lower against major so far on Friday. AUD/USD is trading 0.14% higher at 0.6449, NZD/USD is trading 0.31% higher at 0.5600 while USD/CAD slides 0.06%. Else, EUR/USD is is up 0.11% and GBP/USD is up 0.16%.