Europe Summary and Highlights 12 August

European morning session

GBP gained ground through the European morning, with EUR/GBP down 30 pips to near 0.8620 following the UK labour market data. The data was seen to be slightly on the strong side of consensus, but was quite mixed, with average earnings growth in the ONS data easing to 4.6% in the 3 months to June, and employment falling again in July in the HMRC payroll data. However, the HMRC data showed earnings growth still strong in July at 5.6% y/y, albeit down marginally from June. The ONS data also showed a strong 238k quarterly gain in employment in the 3 months to June, but unemployment also rose 59k. UK front end yield were only up marginally, but GBP gained across the bard, with GBP/USD also up 25pips to 1.3455 despite a generally firm USD.

USD gains were modest, with EUR/USD down around 10 pips to just above 1.16 and USD/JPY also gaining 10 pips to 148.45. AUD/USD also slightly extended overnight losses to 0.6490. Otherwise, the German ZEW survey was on the weak side of consensus, with economic sentiment dropping to its lowest in 3 month, but still at quite neutral levels.

Asia session

As per forecast, RBA cuts cash rate by 25 bps to 3.60%, citing easing labor market and clarity on U.S. tariffs. The RBA seems to be happy about private demand while stays vigilant on consumption recovery. Their forward guidance remain data dependence and we expect another cut in November. AUD/USD is currently trading 0.19% lower at 0.6501 after dipping to 0.6499 as a knee jerk reaction. NZD/USD is also 0.1% lower at 0.5932 while USD/CAD is unchanged.

It is official China got some TACO as Trump confirmed he extends China tariff pause for another 90 days. This is widely expected as both sides continue to commit to negotiation for trade terms and Trump's current focus is on Russia.  USD/JPY is trading 0.09% higher at 148.27. Else, EUR/USD is up 0.02% and GBP/USD is down 0.03%.