Europe Summary and Highlights 29 January
The USD was generally firmer against the riskier currencies through the European morning.
European morning session
The USD was generally firmer against the riskier currencies through the European morning. EUR/USD fell 40 pips to 1.04, and GBP/USD and AUD/USD kept pace. USD/JPY was only around 20 pips firmer at 155.40, and EUR/CHF dropped 10 pips to 0.9425. EUR/SEK was a coupe of figures lower and EUR/NOK a couple of figures higher.
The Riksbank meeting delivered the expected 25bp rate cuts, following Swedish Q4 GDP data which had been marginally lower than expected at 0.2% q/q, though still reasonably solid. EUR/SEK was initially not much changed but NOK/SEK edged lower after the meeting.
Otherwise, there was some generally reasonably strong Eurozone data, with stronger than expected Spanish Q4 GDP at 0.8% q/q in Q4, and better than expected Italian business and consumer confidence. But the German consumer climate index was a little weaker than expected, and Eurozone money supply data was mixed, with lower than expected M3 growth at 3.5% y/y but slightly stronger than expected household loans, rising 1.1% y/y.
Asia session
The Australia headline Q4 CPI came in lower at 2.4% y/y, stays below the 3% upper bound of RBA target range. The more important trimmed mean treads lower from 3.5% in Q3 to 3.2% in Q4. This points toward the likelihood of RBA easing earlier than mid 2025 as CPI cools. The Aussie fell on the release and see AUD/USD is down 0.2% to 0.624, NZD/USD is down 0.05% to 0.5663 while USD/CAD also slipped 0.05%.
While the 2024 December BoJ meeting sounded caution about inflationary development, they seemed to be overcome in January. We did not hear anything from tariff man today and thus the market seems to be relatively quiet. Both the U.S. Treasury and JGB yields are lower and see USD/JPY trading 0.15% lower at 155.23. Else, both the EUR/USD and GBP/USD is up 0.08%.