Europe Summary and Highlights 30 August

Europe Session

The USD had a choppy sideways session in Europe, with the market waiting for the U.S. PCE Inflation data today but more importantly next Friday’s U.S. employment report.  The bias remains for JPY gains to resume, with the charts targeting 142 on USDJPY.  However, the sense is that this could now have to come after the U.S. employment report.  Though EZ inflation declined to 2.2% Yr/Yr, this was expected and is not seen changing the expected ECB rate path.

GBP did gain some further ground against the EUR however, with the latest UK housing data suggesting a recovery and tempering expectations of a 2 cut before year end.  The view that the UK will ease slower than the ECB is gaining ground.  However, traders see some consolidation before a test of the key 0.8383 level on EUR/GBP.