Europe Summary and Highlights 18 Jun
After some consolidation overnight, dollar back to bid after the FOMC breaks
SNB as expected; Norges a little hawkish but NOK focus on USD and on Iran-trade unwinds
UK looks to BoE and by-election
European morning session
While overnight saw a little ‘backfilling’ on the FOMC bond and FX reactions, as the market consolidated, the European morning is seeing the dollar back bid as it approaches the NY session, with bonds also back offered.
EUR/USD as low as 1.1460~ running towards the .40/10 lows. Cable following through towards 1.32~
USD/NOK also still trend-up and furthering its run towards 9.8 (current high of 9.6825).
USD/JPY despite the speed-limits continues to leak out and hitting new YTD highs at 160.90. Still a focus on MoF choices to deal with this USD-driven price action.
No surprises from the SNB with forecasts little changed and only the usual mild references to CHF strength.
Norges Bank left policy left unchanged and reiterating that it sees somewhat tighter monetary stance will be needed to bring inflation down with inflationary pressures somewhat stronger than expected, such that it will likely be necessary to raise the policy rate at one of the forthcoming meetings. NOK however still driven by USD action and the ongoing oil/ToT trade unwinds.
UK labour market data sees unemployment dropping below 5% (4.9% vs mkt 5%), earnings holding at 3.4% (mkt 3.2%), and tax-based workers on payrolls rising 2k with the prior month tempered, revised to -53k from -100k. Focus turning to BoE and then the by-election, but as elsewhere current price action is dollar-led.
Asia session
The NZ Q1 GDP arrived at 0.8% q/q and 1.5% y/y, similar to Q4 2025. However, it is mostly before the energy spike and should be read with scrutiny. U.S. equities remain upbeat, so as Japanese ones while regional equities perform individually. NZD/USD is trading 0.43% higher at 0.5792. AUD/USD is trading 0.27% higher while USD/CAD rises 0.06% on weaker oil.
With the U.S.-Iran MOU signed, market can take a breath now. However, tougher negotiations and integrity on MOU are ahead, should keep every headline live. Market participants are ignoring those now and choose to cheer on lower oil price. We have some kind of jawboning from Japan's chief cabinet secretary Kihara but it sounds weak. USD/PY is trading unchanged at 160.62. Else, EUR/USD is up 0.13% and GBBP/USD is up 0.09%.