European Summary and Highlights 04July

European morning session

The USD edged lower in a quiet European morning session, falling around 0.1% across the board. The only news of note was the German manufacturing orders data, which showed a fifth consecutive decline of 1.6%, well below market expectations, taking the level of orders to its lowest since June 2020 and the pandemic. Excluding the pandemic, orders are at their lowest level since 2012, so there is no real sign of any recovery in the German manufacturing sector. Nevertheless, this had no real FX impact, with EUR/USD edging above 1.08 and German short end yields actually higher on the day.

Otherwise, there was a little softness in the scandis, with EUR/SEK rising 3 figures to 11.35, while Swiss CPI came in slightly weaker than expected at flat on the month in June. This initially triggered a blip higher in EUR/CHF, but it settled back to opening levels near 0.9725.

Asia session

The Australia May Trade Balance  came in lower than expectation of 6678m at AUD 5773m but both export and import are showing improvement from previous month with export being the strongest in nine months and import resume expansion. Both are positive signs for the Australian economy and seems to be supporting the Aussie. AUD/USD is trading 0.14% higher at 0.6714 despite mixed risk sentiment, NZD/USD is up 0.11% at 0.6110 while USD/CAD is unchanged.

USD/JPY has a partial correction earlier in the session as it traded as low as 161.14. But as Nikkei reached new highs, JPY was being pressured again to trade only 0.07% lower at 161.53 currently. 10yr JGB yields slipped lower amid the M5.4 earthquake off Chiba prefecture. There was some political fiasco in U.S. regarding Biden's commitment towards running and it is expected to be back and forth headlines till the real election data. Market reaction will have to wait until the end of Independence day holiday. Else, EUR/USD up 0.03% and GBP/USD is unchanged.