Europe Summary and Highlights 4 September

Europe Session

The USD is marginally on the defensive after yesterday selloff in U.S. equities, as opinion is mixed on what it means for FX.  Some FX traders view at as temporary given the volatility in equities, but other note that the S&P500 has failed on the upside twice and this is bad for U.S. equites and the USD.

The approach of Friday’s U.S. employment report is also curtailing movements, as traders do not want to be squeezed by a stronger set of numbers but would sell the USD on a weak set of data.  USD/JPY is seen to be the leading edge of the USD movements, given the equity volatility could amplify the JPY movements.

Elsewhere, CHF has crept higher versus the EUR in the past 24 hours given the JPY and equity market movements.  However, some speculation has started in Switzerland that the SNB could consider 50bps rather than 25bps on September 26 to curb CHF strength.