Europe Summary and Highlights 3 Jun
USD/JPY whippy from 160 into BoJ Ueda speech
Otherwise, dollar has a haven lean as oil extends correction higher on Iran disquiet
European morning session
Very much a sense of disquiet over ongoing Iran standoff and flare ups, with crude up around $2 ½, continuing the upward correction, and the dollar holding more of a haven bias again, if still within recent bands. NZD and SEK still tending to be the higher beta pairs. EUR/USD back towards 1.16~ support again.
USD/JPY seeing the liveliest intraday action into and through BoJ Ueda’s speech in a couple of bursts of positional adjustment from 160~ to 159.30s~, before back to balancing out just off the key figure in the 159.70-80s again. Ueda reiterated basic stance of continuing to raise rates while baseline remains probable, and stresses upside inflation risks, financial conditions remain supportive, and the dangers of delaying action if it impacts market trust. All in all, comments back a June hike.
UK final service PMI at 49.3 (flash 47.9), with composite 49.7(48.5).
Eurozone final composite PMI 48.5, lowest since Nov24 but above the prelim 47.5, with services at 47.7 (flash 46.4)
OECD latest forecasts come in largely unchanged with the main slight downgrade for Japan. Quite a dovish stance on the BoE, seeing policy on hold until Q1-27, before being cut to 3.5%. ECB also seen more measured with the one hike and then reversal.
Asia session
Australian Q1 GDP is a miss at 0.3% y/y, lowered from 0.9% in Q4 25. It looks like energy prices and other A.I. equipment import are dragging the economic growth, so as consumption and barely saved by business investment. AUD/USD is trading 0.15% lower at 0.7168. NZD/USD is also trading 0.2% lower while USD/CAD rises 0.07% higher despite higher oil. U.S. major equity indexes are lower while regional equities outperform.
To combat steadily higher energy pressure, Japan's cabinet has approved a ¥3.1 trillion supplementary budget. It is widely expected as the magnitude of extra stimulus are unlikely to be covered from special funds previously set aside. JGB yields' reaction is so far modest with only the 10yr yields rising the most by more than 2%. USD/JPY is trading just below the 160 handle at 159.89. Else, EUR/USD is down 0.06% and GBP/USD is down 0.03%.