European Summary and Highlights 2 August

European morning session

The USD lost a little ground through the European morning, with USD/JPY dropping around 20 pips to 14880 and EUR/USD gaining 20 pips to 1.0820. There was also a sharp rise in EUR/NOK, gaining 10 figures to 11.91, while EUR/SEK was also dragged a couple of figures higher. The cause of NOK weakness was unclear. There was slightly higher than expected Norwegian July unemployment reported, but this doesn’t look to have been the trigger for NOK weakness.

Datawise we saw Swiss CPI for July come in as expected at 1.3% y/y. EUR/CHF was slightly higher, bouncing off support at 0.94. Otherwise French industrial production rose 0.8%, slightly less than expected in June, while Italian production was a bit stronger than expected at 0.5% m/m.

Asia session

The Nikkei has fall almost 5% on Friday's Asia session. While it seems to be poor global risk sentiment, the hawkish tone from BoJ may have spooked investors. The avalanche drew verbal support from multiple Japanese officials in the Japanese economy but is doing little. The fall in Japanese equities seems to have limited the recent JPY strength and lead to a recover of earlier loss. USD/JPY is trading flat at 149.33 after touching a session low of 148.87 with JGB yields falling faster than U.S. T-yields.

The carnage in equities does not seem to bother the Aussie when USD is trading broadly lower and commodity steady. The Q2 Australian PPI has come in stronger than expected, partially echoes the heat in Q2 CPI and the translation in the coming months may keep Australian inflation warmer. The AUD/USD is trading 0.2% higher at 0.6514, NZD/USD is unchanged while USD/CAD slipped 0.1%. Else, EUR/USD is up 0.05% and GBP/USD is down 0.1%.