Europe Summary and Highlights 8 Jul
Trumps 'MOU over' remark the main focal point
Oil extends bounce, though FX remains quite tepid
Slight lift for oversold NOK and CAD; NZD retains hike lift, but capped back
European morning session
Quite a lively morning even if FX is not fully reflecting that.
Trump’s appearance at NATO always had the risk of freewheeling haymakers and that has proved the case. Main focus has been on the remark that he thinks the MOU is over and he doesn’t want to deal with these people. Previously very relaxed oil market slightly spooked and having to give some ground, extending the bounce on the overnight strike exchanges to now be up $4 ½ to $5.
Other Trump remarks include a swipe at Spain (instructed Bessent to ‘cut off all trade with Spain’).
For all this, FX is a little sidelined, EUR/USD stuck flat at 1.14+/-, partly on the mixed backdrop and partly on a large sequence of large options in and around the current area in coming days – alongside the wait for FOMC Minutes.
NOK and CAD do get a little support, having become very oversold in recent trade.
NZD being pegged back slightly from its RBNZ rate hike move as the current jitters temper higher beta mood.
Asia Session
The RBNZ hiked rates by 25bps to 2.5% unanimously while Governor Breman says Inflation may have already peaked (3.9% y/y June 2026). While they cite "Gradually moving rates toward neutral", it does not seem to suggest more hikes to come immediately with all the uncertainty. NZD/USD is trading 0.44% higher at 0.5703. AUD/USD is trading 0.2% higher while USD/CAD slips 0.11%.
As U.S.-Iran exchange fire, the haven bids for USD arrived in early Asia. The latest report see Iran targeting U.S. base in Bahrain and looks like the fragile ceasefire is already broken. USD/JPY has already broken Monday high and fast approaching July high at 162.60, currently trading 0.17% higher at 162.35. Else, EUR/USD is up 0.07% and GBP/USD is unchanged.