European Summary and Highlights 20 August
USD/JPY dropped around 70 pips to 146.50 through the European morning, and EUR/CHF fell 20 pips to 0.9530.
European morning session
USD/JPY dropped around 70 pips to 146.50 through the European morning, and EUR/CHF fell 20 pips to 0.9530. The USD was also generally weaker, with GBP, AUD and CAD all gaining around 0.15%, but EUR/USD was little changed at 1.1080.
EUR/SEK fell 5 figures to 11.3850 following the Riksbank decision to cut rates. This had been well anticipated, but EUR/SEK fell back anyway, despite the Riksbank statement also being on the dovish side, suggesting there was scope for more than the 50bps of further cuts that the market is pricing in over the rest if the year.
Otherwise there wasn’t much news. Eurozone final July CPI was as expected and unrevised at 2.6% headline 2.8% core.
Asia session
USD/JPY has swung by more than a figure on Tuesday's Asia session with little headline nor economics release. The early dip in JPY pairs seems to be flow related as we see other majors little affected and approaching Asia noon there comes the USD bids. USD is trading broadly stronger against majors with U.S. Treasury Yields higher in the back end. USD/JPY is trading 0.23% higher at 146.90 after testing a session low of 145.85.
The RBA August meeting minutes show its member considered a rate hike but decided holding is better. Given the current inflationary dynamics, they see rates need to be at current level for longer but they are also reassessing such in every meeting. In short, untill we see a moderation of CPI towards 3%, there will not be a rate cut. The AUD/USD was not supported by such as it is already the consensus for the market. The push back for more tightening and the soft regional risk sentiment have pushed AUD/USD 0.21% lower at 0.6718, NZD/USD fared better to trade 0.09% higher at 0.6120 while USD/CAD is unchanged. Else, EUR/USD is down 0.06% and GBP/USD is down 0.07%.