European Summary and Highlights 21 June

European morning session

The EUR fell back through the European morning after weaker than expected June PMIs. Both manufacturing and services were weaker than expected, and the composite PMI fell to 50.8, reversing most of the gains seen in May. EUR/USD slipped below 1.07 to a low of 1.0671 in response. UK PMIs were also weaker than expected, although the manufacturing index held up a little better than in the Eurozone. GBP gained some ground against the EUR, with EUR/GBP falling back around 20 pips to a low of 0.8442 before bouncing to 0.8450. GBP also benefited from stronger than expected May retail sales, which rise 2.9% m/m, more than reversing the 1.8% April decline.

The USD was generally firmer on the back of the softer European data, with AUD/USD dipping around 15 pips to 0.6650 and USD/CAD rising 15 pips to 1.3695. USD/JPY was not much changed neat 158.90 after seeing a dip after the European PMIs to 158.70. EUR/NOK continue yesterday’s decline, dropping another 2 figures to 11.27.

Asia session

Here we have the resumption of jawbone easing from Japan as USD/JPY getting closer to the 160 figure. The higher than expected headline CPI did help the JPY and see early gains above 159 reversed. The Japan May headline CPI has come in higher at 2.8% y/y, less fresh food came in 0.1% lower than expected at 2.5% while ex fresh food and energy continue to tread lower to 2.1% from 2.4% prior. This CPI would be welcoming by the BoJ to support their next step in tightening but looks like most inflationary pressure comes from transitory items. USD/JPY is trading unchanged at 158.89 after touching a high at 159.12 with JGB outpace U.S. Treasury in yields.

USD is trading broadly softer in Asia after a strong New York on Thursday. While regional sentiment sagged, AUD/USD shook it off and is trading 0.17&, NZD/USD is also 0.09% higher while USD/CAD is 0.09% lower as oil slipped ten cents. Else, EUR/USD is up 0.16% and GBP/USD is up 0.04%.