European Summary and Highlights 06 Mar
The USD was generally weaker through the European morning, with the JPY and the European currencies generally gaining ground.
European morning session
The USD was generally weaker through the European morning, with the JPY and the European currencies generally gaining ground. The JPY started the session the strongest, benefiting from press reports that some BoJ board members will say that exiting the negative interest rate policy (NIRP) at the March meeting would be “reasonable”. USD/JPY dropped around half a figure on this news, but recovered most of the decline by the end of the morning, finishing only around 10 pips below opening levels near 149.75.
After initially lagging behind the JPY gains, the EUR finished up outperforming, gaining around 20 pips on the session to 1.0875. The EUR may have benefited from the German trade data released early in the session, which showed a sharp rise in both exports and imports in January, but with exports outperforming and taking the trade surplus to a new all time high of EUR27.5bn. The Eurozone retail sales data came in as expected at 0.1% m/m in January.
The CHF underperformed the other European currencies, with EUR/CHF rising to another new 3 month high of 0.9630.
Asia session
The Australian 2023 Q4 GDP missed estimate on a q/q basis at 0.2%, unchanged from Q3 and treads lower y/y to 1.5% from 2.1% in the previous quarter. We are finally seeing domestic demand succumb to inflationary pressure with the household savings ratio increased to 3.2% from 1.9%. The Australian domestic demand has been supporting the economy unsustainable for the past quarters with negative real wage. The report signals the beginning of Australians' reaction towards depleting savings. Regional sentiment is positive and see the AUD/USD supported and trading 0.21% higher at 0.6517, NZD/USD also 0.16% hihger at 0.6096 while USD/CAD slipped 0.08% with oil gaining more than 30 cents.
Reuters reported that Bank of Japan will likely revise down assessment on consumption and output without changing the forecast for moderate economic recovery at March meeting. Household spending and auto disruption were cited as the key reasons. The headline also said the changes are unlikely to affect timing of exit from stimulus. From the wage negotiation end, we are hearing that Toyota will be responding to the union hike demand on next Wednesday. U.S. Treasury Yields are lower while JGB yields higher. USD/JPY rotated below 150 to 149.81 and is 0.15% lower for the session. Elsewhere, EUR/USD is 0.01% lower and GBP/USD unchanged.