Europe Summary and Highlights 17 June
A generally quiet European morning saw little change in most FX pairs.
EUR/USD was unchanged near 1.1555/60, while USD/JPY edged slightly higher to 144.85. GBP was also a little weaker, with EUR/GBP gaining 15 pips to 0.8533, while the CHF was the strongest currency, with EUR/CHF falling 10 pips to 0.9390, helped by softer equity markets.
There was little news of any note. With regard to the BoJ’s overnight decision to reduce QT from 2026, BoJ governor Ueda told a press conference that "It's desirable to continue tapering to allow yields to move more freely reflecting market forces. But tapering too rapidly could cause unintended impact on market stability."
Datawise, Swedish unemployment was higher than expected in May at 9.0% on a seasonally adjusted basis, but there was no impact on the SEK, with EUR/SEK steady at 10.96. The German June ZEW survey showed an improvement in sentiment, reaching its second highest level of the year, close to the highs before Trump announced reciprocal tariffs, while the current conditions index hit its highest for a year.
Asia session
Despite missiles are still flying, choppy market has tilted towards more optimistic with Trump suggesting he will be proposing for nuclear /peace talks with Iran. The G7 also issued a joint statement reiterating their position on no nuclear weapons for Iran. BoJ keep rates unchanged as expected. The changes to bond purchase tapering are also aligning with market forecast, by 200 billion JPY after Q2 2026. The remark from Japanese PM Ishida on Monday has poured cool water on expectation of a trade deal to be reached soon. Trump also seems to be distracted by the geopolitical tension between Israel and Iran by departing the G7 summit early. Our central forecast sees the BoJ to hike by 25bps in the September meeting if a trade deal is to be reached before. USD/JPY reversed earlier gains to 145.1 and is trading 0.18% lower at 144.44 while 10yr JGB yields approaching 1.5%.
The broad equity indexes are all in the red, except Japanese equity index. The USD is trading individually against major currencies. AUD/USD is up 0.19% to 0.6536, NZD/USD is also 0.11% higher at 0.6067 while USD/CAD is unchanged. Else, EUR/USD is down 0.02% and GBP/USD is down 0.03%.