Europe Summary and Highlights 28 August

European morning session

The EUR fell back through the European morning, with the JPY and the CHF the main beneficiaries. EUR/USD was only modestly weaker, slipping around 10 pips to 1.1135, but EUR/JPY dropped half a figure to 160.55 and EUR/CHF lost 20 pips to 0.9380. EUR/GBP held steady at 0.8425 after recent losses, and AUD/USD was steady at 0.6790.

Markets were generally quiet, with the Eurozone money data the only data of note. These were a little weaker than expected, with M3 growth rising only slightly to 2.3% y/y and lending remaining subdues both to firms and households. Earlier, French consumer confidence showed a small increase in August as expected.

Asia Session

Israel launches a large scale operation against militants in the northern West Bank. Thousands of solider are reported to be mobilized for operation that is expected to last for weeks. The target location will be in Tukarm and Jenin with exact target yet to be revealed. So far such geopolitical tension's impact towards the market remains minimal but must be closely watched. Regional equities are lower with Nikkei's toe in the green. U.S. three major equity indexes close to unchanged. The July Australian monthly CPI arrived at 3.5% y/y, a moderation from 3.8% but still higher than the 3% target range of RBA. It supports RBA’s rhetoric to push back easing. AUD/USD rose to 0.6812 before retracing to 0.6797 now, NZD/USD is 0.09% lower at 0.6247 while USD/CAD rose 0.07%.

BOJ Deputy Gov. Himino says the financial and capital markets remain unstable. Despite Ueda's speech before parliament on last Friday suggest a hawkish tilt from the BoJ, if BoJ members are concerned about market stability, the magnitude and pace of further tightening will be likely restrained. USD/JPY reversed earlier losses to trade 0.37% higher at 144.46 despite JGB yields outperform their U.S. counterpart. Else, EUR/USD is down 0.22% and GBP/USD is down 0.14%.