North American Summary and Highlights 5 Jun
Overview - The EUR was firmer after the ECB meeting but the USD was supported by optimism on US-China trade, after taking a brief hit on higher initial claims.
North American session
There was little immediate impact to the as expected 25bps ECB easing, but uncertainty over the timing of the next move gave the EUR a lift, EUR/USD to a high of 1.1495 from 1.1420. EUR/GBP rose to near .8450 from .8415 and EUR/CHF to near .94 from .9360. USD weakness was assisted by a bounce in initial claims to 247k from 239k, though April’s trade deficit of $61.6bn from $138.3bn in March was even lower than expected and Q1 unit labor costs were revised up to 6.6% from 5.7%.
A dip in USD/JPY below 143 on the data was however quickly reversed, with equites lifted, albeit temporarily, by the news that a conversation took place between Trump and China’s Xi, which Trump later described as good. USD/JPY peaked just below 144 before a modest correction. As the USD picked up EUR/USD partially revered its gains, falling to 1.1440, as did EUR/GBP and EUR/CHF. EUR/JPY advanced to 164.30 from 163.50. Like GBP and CHF, AUD and CAD saw gains versus the USD erased.
European morning session
EUR/USD and USD/JPY were little changed through the European morning, but commodity currencies were better bid. AUD/USD gained 20 pips to 0.6510 and USD/CAD fell 25 pips to 1.3655. EUR/CHF was also firmer, rising 15 pips to 0.9360, while EUR/GBP slipped marginally lower in generally slightly risk positive trading.
The main data of note was the Swedish flash CPI data for May, which came in below expectations at 2.3% y/y on the targeted CPIF measure. This initially triggered modest SEK losses, with EUR/SEK reaching a peak at 10.9650, but the rise was reversed by the end of the session. German factory orders were a little stronger than expected at 0.6% m/m in April, suggesting a mild improvement in the underlying trend.