Europe Summary and Highlights 3 September
The JPY gained some further ground across the board in Europe and building on the JPY surge in Asia, after BOJ Ueda recommitted to further rate hikes if growth and inflation come in as expected.
Europe Session
The JPY gained some further ground across the board in Europe and building on the JPY surge in Asia, after BOJ Ueda recommitted to further rate hikes if growth and inflation come in as expected. The next 10bps hike in the BOJ policy rate is not discounted until the March 2025 BOJ meeting, but traders feel that it could arrive early in October or December. The quick turnaround in the JPY has also reinforced medium-term bullish JPY sentiment.
EUR/USD actually saw some small gains for the USD, but this is technical and partially EUR/JPY trades hurting EUR. The market looks for 25bps from the ECB in September and December and data plus splits on the ECB governing council means that the market is reluctant to discount a 3 cut before year-end. Focus now is switching to Tuesday ISM manufacturing data, where a weak number could reawaken jitters over a U.S. hard landing.
Elsewhere, AUD remained soft after the decline in Asia and a refocus on weaker iron ore prices.