Europe Summary and Highlights 29 September

European morning session

The USD fell back against the JPY but was slightly firmer against the risker currencies in the European morning. USD/JPY dropped 30 pips to 148.60, while most of the riskier currencies were down 0.1% or so against the USD. JPY gains were helped by a general decline in US and European yields, although this also helped to produce some gains in equity markets.

News was thin on the ground. There was slightly weaker than expected preliminary Spanish September CPI data, showing a 0.1% m/m rise in HICP, while the European Commission survey was a little stronger than expected, although very little changed in September from August. UK Money and credit data showed a slightly larger than expected 0.4% rise in M4, but smaller than expected gains in mortgage lending and approvals and consumer credit.

Asia session

The USD headed to a soft start with Trump thinking of more chip tariffs. While it is generally regard as a part of his trade tactic, it still create a certain level of uncertainty in the market. From the Japan side, we heard Japan leadership contender Takaichi hint that she may renegotiate trade deal with the US. It is obviously a vote move as she is tilted towards more easing and this move seems to be trying to benefit from nationalism voters' favor. USD/JPY is trading 0.45% lower at 148.0 with both the U.S. Treasury and JGB yields lower.

The broad risk space is looking at a vibrant start. We have Trump and Netanyahu nearing a Gaza peace agreement but Hamas has been the sticky part. From the trade front, it is reported Xi would like a policy shift on Taiwan from Trump to facilitate a swift trade deal. Hong Kong equities are leading the gains with U.S. and Chinese equities performing similarly while Japanese equities lag. AUD/USD is trading 0.35% higher at 0.6569, NZD/USD is trading 0.25% higher at 0.5789 while USD/CAD slips 0.16%. Else, EUR/USD is up 0.26% and GBP/USD is up 0.24%.