European Summary and Highlights 08 May

European morning session

EUR/USD and USD/JPY both gained around 10 pips through the European morning. The EUR was helped a little by the German industrial production data which showed a slightly smaller than expected 0.4%b m/m decline. There were downward back revisions which meant the data was much as expected, but it still means a strong Q1 gain in production, underpinning expectations of a German and Eurozone recovery.

The SEK lost ground after the Riksbank cut the policy rate to 3.75%from 4.0%, although the decline was modest as the cut was generally expected. EUR/SEK hit a high just above 11.75, but settled back to 11.73, around 3 figures higher on the day. The Riksbank also indicated a fairly dovish outlook with another 50 bps of easing projected by the end of the year.

Most other pairs were not much changed against the USD, with the EUR making small gains against GBP, with EUR/GBP reaching its highest since April 23 at 0.8615.

Asia session

USD/JPY is up three days in a row and regained the 155 handle. Japanese finance minister restart their verbal intervention while Ueda casually pouring cold water by saing "Doesn't see yen moves as having a big impact on trend inflation so far". U.S. Treasury Yields are higher across the curve while JGB yields recovered the opening gap.  USD/JPY is trading 0.31% higher at 155.17.

Regional sentiment is broadly soft on Wednesday and USD is solid so far. Aussie continues the weakness post RBA and drift lower. AUD/USD is down 0.31% to 0.6577, NZD/USD also 0.18% lower at 0.5991 while USD/CAD rose 0.2% to 1.3753 as oil slips half a percent. Else, EUR/USD is down 0.14% and GBP/USD is down 0.17%.