European Summary and Highlights 23 May

European morning session

EUR/USD gained around 15 pips to 1.0845 in the European morning helped by slightly better than expected Eurozone PMI data. This showed a further rise in the composite index in May, due to a strong rise in the manufacturing index and despite a slight decline in the services index. The EUR also gained ground against GBP, with EUR/GBP rising to 0.8520 from an open near 0.85 as the UK PMI index disappointed. While the UK manufacturing index also rose, the services index fell more sharply, and the composite index was consequently lower on the month.

The AUD also managed gains through the morning, with AUD/USD rising around 10 pips after overnight weakness, and USD/CAD was also softer, while USD/JPY was not much changed.

Asia session

The Chinese military has begun its military drills around Taiwan. Apart from the regular rhetoric, Ministry of National Defense of the People's Republic of China says the drills also serve as a strong punishment for the separatist acts, pointing to Lai Ching-Te's May 20 speech. So far it has only affect the sentiment in regional equities in China and Hong Kong but one must beware of the underlying risk of further escalation of such tension AUD/USD is trading 0.18% higher at 0.6630 with USD broadly soft on strong U.S. equity performance, NZD/USD is trading 0.35% stronger at 0.6118 while USD/CAD is trading 0.09% lower at 1.3681. 

The USD is trading broadly softer as U.S. equities are cheering Nvidia's earnings beat. U.S. Treasury yields are little changed while 10yr JGB yields retreated from one percent as BoJ did not further reduce the amount of JGB purchase in their operation. USD/JPY is trading lower by 0.03% at 156.74. Else, EUR/USD is up 0.04% and GBP/USD is up 0.07%.