Europe Summary and Highlights 25 September
The USD was generally firmer through the European morning, particularly against the JPY with EUR/JPY making a new high for the month at 161.29.
European morning session
The USD was generally firmer through the European morning, particularly against the JPY with EUR/JPY making a new high for the month at 161.29. USD/JPY gained 90 pips to 144.20 while EUR/USD fell only modestly, losing around 10 pips from an open just below 1.12. GBP fell more sharply, with EUR/GBP up 20 pips from an open below 0.8350, and GBP/USD consequently losing 40 pips to 1.3370. GBP weakness followed comments from MPC hawk Megan Greene who suggested gradual easing was on the cards, even though UK yields were little changed. USD/CHF also rose strongly gaining 70 pips to 0.8490, with EUR/CHF showing similar strength.
The main news of the morning was the Riksbank monetary policy decision, which produced the expected 25bp rate cut but a much more dovish projection, with the Riksbank suggesting a possibility that there could be a 50bp cut at one of the two remaining meetings this year. Nevertheless, Swedish yields were little changed beyond the very short end, and EUR/SEK was also not much changed.
Asia session
The Japan August services PPI has came in higher than expected at 2.7% y/y. It confirms wages are growing and in other words business margin will also be affected. U.S. Treasury Yields are performing individually while JGB yields slips. USD/JPY is trading 0.03% higher at 143.25.
The Australian August monthly has came in lower than expected at CPI 2.7% y/y, from 3.5% in July and finally in range of RBA's target. However, most of the moderation comes from government energy rebate and trimmed mean remain above target range at 3.4% y/y. It shows that there are still way to go before a RBA easing. The People’s Bank of China cut the Medium-term Lending Facility (MLF) rate to 2% from 2.3% . It supported the regional equity market and see both the Chinese and HK indexes up close to 2%, while U.S. three major equity indexes are slightly in the red. AUD/USD continued the post CPI slip by 0.12% to 0.6884, while NZD/USD is down 0.1% and USD/CAD unchanged. Else, EUR/USD is up 0.15% and GBP/USD is up 0.03%.