Europe Summary and Highlights 26 September

European morning session

The JPY was marginally lower and the riskier currencies generally slightly higher in the European morning, with equities once again making solid gains after the better Chinese equity performance overnight. EUR/USD was net little changed near 1.1150, but USD/JPY briefly popped above 145 before settling back to 144.90 after opening around 144.80. AUD and GBP both gained modestly against the USD.

The main news of the morning was the SNB rate decision This produced the expected 25bp cut in the policy rate, with the SNB also indicating that further cuts were likely in coming quarters as their inflation forecasts for 2025 and 2026 were both revised significantly lower to 0.6% and 0.7% respectively. There were nevertheless modest CHF gains against the EUR as there was a minority expectation of a 50bp cut. EUR/CHF finished the morning at 0.9450, down from 0.9480 at the open.

Datawise we saw mild improvements in German and Swedish consumer confidence data, while the Eurozone money data was also slightly stronger than expected, with M3 up 2.9% y/y, the most since January 2023.

Asia session

The BOJ July minutes calls for further gradual, but timely, interest rate increases, confirms their hawkish stance of further tightening. There is little other surprises from the minutes as the BoJ has already showed their stance in the latest rhetoric.  JGB yields opened higher while U.S. Treasury Yields slightly lower and see USD/JPY trading 0.07% lower at 144.63.

It is reported that China is considering injecting US$142bn of capital into top banks from Bloomberg and Reuters. It seems to be more follow through stimulus from the Chinese government. Regional sentiment is well supported by such and see AUD/USD 0.31% higher at 0.6844, U.S. three major equity indexes are also in the green. NZD/USD is only up 0.07% to 0.6266 while USD/CAD slipped 0.11%. Else, EUR/USD is up 0.1% and GBP/USD is up 0.15%.