European Summary and Highlights 11 Apr
The USD stayed strong through the European morning session, gaining modestly against the EUR and JPY, while being little changed against the AUD, CAD and GBP.
European morning session
The USD stayed strong through the European morning session, gaining modestly against the EUR and JPY, while being little changed against the AUD, CAD and GBP. EUR/USD lost around 15 pips to 1.0730, while USD/JPY gained 30 pips to a new 34 year high at 153.29 before edging lower. GBP initially strengthened, helped by comments from MPC member Greene who said rate cuts should be some way off, although Greene is an established hawk, and GBP fell back to near opening levels after the initial gain.
The Bank of England credit conditions survey was the only other real news of note, with markets awaiting the ECB meeting. British lenders expect to see both supply and demand for mortgages to strengthen in the coming three months as the housing market strengthens further. A positive net balance of 19% of lenders expected the supply of mortgages to increase in the coming three months, the highest reading since early 2021. Lenders expected default rates for both secured and unsecured credit to rise in the coming three months.
Asia session
As the aftermaths of higher U.S. CPI, USD/JPY has once again reached new highs above 153 figure. Suzuki came up with an escalation of rhetoric by suggesting close communication with Kanda, who executes intervention, to try and curb the JPY's weakness. However, he followed up with a remark that forex levels are basically determined by markets and suggest weak JPY has its pros and con. It does not sound like someone who is ready to pull the trigger. U.S. Treasury Yields are taking a breather while JGB yields continue to climb, USD/JPY is trading 0.156% lower at 152.90.
Regional risk performs individually while U.S. equity indexes recovered a tad. Chinese March CPI came in lower than estimate and we see the PBoC once again fixed the onshore Yuan much stronger than expected to curb CNY losses. AUD/USD benefited from these factors, along with solid commodity and higher consumer inflation expectations to trade 0.15% higher at 0.6522, NZD/USD also 0.21% higher at 0.5987 while USD/CAD slipped 0.04% to 1.3676.. Else, EUR/USD is up 0.03% and GBP/USD is up 0.06%.