European Summary and Highlights 01 Mar
The USD showed some early gains in the European morning, but finished the session little changed.
European morning session
The USD showed some early gains in the European morning, but finished the session little changed. EUR/USD briefly dipped below 1.08 and USD/JPY hit a high of 150.68 before both returned to opening levels near 1.0820 and 150.35 respectively. EUR/CHF reached a high of 0.9595, continuing its overnight gains, but slipped back to 0.9575 by the end of the morning.
Newswise the Eurozone CPI data had been well trailed by the national CPI numbers on Thursday ,and came in slightly above the surveyed consensus at 0.6% m/m, 2.6% y/y, with the core a little further above the consensus at 3.1% y/y. However, the real consensus was likely close to the actual numbers as the French CPI on Thursday had been slightly above expectations.
Otherwise, the manufacturing PMIs for the Eurozone and the UK were both revised a little higher, but remained at low levels and didn’t provide any support for the currencies.
Asia session
We are seeing a back and forth action in JPY on Friday as Ueda said he need to see the outcome of wage negotiations currently taking place for confirmation of a positive wage-inflation cycle after Takata's comment on Thursday. While it seems like Ueda walked back on Takata's remark in terms of inflation dynamics, it does not change the fact that the spring wage negotiation remain the number one factor in determining the pace of changing monetary policy. We believe Ueda's remark is rather a copy-paste speech than a disagreement with monetary policy change. In fact, one of the key points Takata mentioned on Thursday, is positive signs from major companies wage hike, which should see trend inflation achieving target. USD/JPY rose on Ueda's remark to trade 0.32% higher at 150.45, almost reversing the Thursday's losses.
China February Manufacturing PMI stays in contraction five months in a row at 49.1while CAIXIN (private) PMI beats estimate of 50.6 to be at 50.9, while official non-manufacturing PMI also beat estimate of 50.9 to arrive at 51.4. yet, the overall positive report does not entertain Chinese equities as they take a breather after Thursday's strong gain. Global equities are broadly positive and see the AUD/USD being supported to 0.6508, 0.17% higher for the session, NZD/USD also 0.06% higher at 0.6090 while USD/CAD slipped 0.05% to 1.3570 with oil gaining twenty something cents. Elsewhere, EUR/USD is up 0.06% and GBP/USD is up 0.02%.