Europe Summary and Highlights 8 May
USD modestly weaker through European morning, NOK strong
European morning session
The USD was generally weaker through the European morning, with EUR/USD gaining around 30 pips to 1.1770, and most other European currencies seeing similar gains. The JPY underperformed, with EUR/JPY gaining 30 pips to 1.8440. The scandis were the best performers, with EUR/NOK dropping 7 figures to 10.85, erasing the losses seen in the European afternoon yesterday, and EUR/SEK was also softer, dropping 4 figures to 10.84. NOK gains came despite Norges Bank governor Ida Wolden Bache saying that Norges Bank didn’t anticipate a big increase in interest rates, after yesterday’s policy rate hike to 4.25%.
EUR/GBP traded slightly softer with the markets apparently seeing the UK local election results as marginally less bad for the ruling Labour party than expected, despite the loss of hundreds of council seats. UK gilt yields also edged slightly lower. Datawise, German industrial production data was weaker than expected in March, falling 0.7%.
Asia session
Japan March Labor Cash Earning missed estimate but is still showing a 2.7% y/y growth. While it is disappointing, the trajectory continue to points toward stronger than average wage growth. The results of wage negotiation may not be fully applied yet but one must also be aware of potential slowing, in case business fear margin squeeze from energy shock to withheld strong wage hikes. USD/JPY is trading 0.02% higher at 156.91.
The UAE says it is once again responding again to a missile threat, looks like the fragile ceasefire is not holding. Both sides have been calling such not a break of ceasefire, but what is obvious is, both sides are exchanging fire. It looks like the market may have been in front of themselves in pacing peace dividends bets. AUD/USD is trading 0.14% higher at 0.7216. NZD/USD is trading 0.05% while USD/CAD slips 0.04%. Both Brent and WTI are still trading lower. U.S. major equities are outperforming regional counterparts with precious metal higher. Else, EUR/USD is up 0.03% and GBP/USD is up 0.04%.