Europe Summary and Highlights 19 June
EUR/USD and USD/JPY both rose around 20 pips in the European morning, to 145.35 and 1.1475 respectively. Normally, this would reflect some improvement in risk sentiment, but most markets were fairly steady on this US holiday.
The main news of the morning were the SNB and Norges bank monetary policy meetings. The SNB cut rates 25bp, taking the policy rate back down to zero as most had expected. However, EUR/CHF fell around 30 pips to 0.9370 in response to the cut, as a minority had expected a cut to negative rates. The SNB still left open the possibility of negative rates in the future and remained prepared to intervene when necessary in the FX market.
The main surprise was the 25bp cut from Norges Bank, as the market consensus strongly favoured no change. The Norges Bank noted that “a restrictive monetary policy is still needed but that it is now appropriate to begin a cautious normalisation of the policy rate” and suggested another one or two cuts might be seen this year. EUR/NOK initially rose 1% on the news but finished around 0.5% higher at 11.55
Asia session
The May Australia unemployment rate is steady at 4.1% y/y. Headline employment change missed and dipped into negative territory of -2.5k. Participation rate is slightly off historic high at 67%. The session's highlight is on potential U.S. strike over the weekend and see USD higher. AUD/USD is trading 0.33% lower at 0.6487, NZD/USD slipped more by 0.55% to 0.5995 while USD/CAD rise 0.12%. So far the "leaks" from the U.S. side are back and forth but generally suggest the U.S. has plans to strike Iran's nuclear facility on Saturday and is waiting for Iran's response to potential talks.
Japan is drafting plans to cut 20/30yr bond sales but increasing sales in short dated ones. It seems to be in reaction to adjust market concern on supply/demand and BoJ's decision to further cut bond purchase in 2026. USD/JPY is trading 0.04% lower at 145.03 with 10yr JGB and U.S. Treasury yields both lower. Else ,EUR/USD is down 0.14% and GBP/USD is down 0.12%.