Europe Summary and Highlights 13 May
GBP and gilts steady as immediacy of PM challenge seen abating, even as long-term prospects remain doubtful
Dollar still nudging firmer, DXY and EUR/USD testing next levels
US-China talks kick off and key focus for rest of week
European morning session
Amid the current tense environment, albeit continued US risk resilience, the dollar continues to creep higher in the European morning with EUR/USD testing 1.17- support, opening scope down to 1.1670 weekly low if cleared, while DXY is testing the 98.50 mark, above which there's scope to pick up towards 99/99.18.
US-China trade talks are underway today ahead of the US-China summit and Trump Beijing visit Thu-Fri. Trump dismisses suggestions of China help on Iran (‘I don't think we need any help with Iran. We'll win it one way or the other, peacefully or otherwise’)
In the UK, with PM Starmer staring down the revolt, Streeting reluctant to kick off a challenge, and supporters of Burnham having to play the long game, some of the immediacy of the challenge looks to be dissipating. The Starmer-Streeting meeting ahead of the King’s speech lasted barely 15 minutes. Gilts settled after backfilling some of yesterday’s gap, while EUR/GBP in a touch and sitting around 0.8650 congestion having rejected the spike test to 0.8695 yesterday.
Eurozone March industrial output 0.2% (mkt 0.3%), -2.1%y/y (mkt -1.7%). Flash Q1 GDP 0.1%q/q (mkt 0.1%).
Asia session
Australian Q1 wage price index bangs in estimate at 3.3% y/y, slightly lower than the 3.4% in Q4 2025. It came at no surprise with the strength in Australian labor market only moderating but little signs of slowing. Major equity indexes are recovering the overnight losses while precious metals are performing individually. AUD/USD is trading 0.09% lower at 0.7233. NZD/USD is also 0.22% lower while USD/CAD is unchanged with both Brent and WTI lower.
It is reported that Iran has rebuilt access to 30 of 33 Hormuz missile sites. While the assessment indicates Iran's capability to control the Strait of Hormuz, it is also a convenient excuse for the U.S. to resume military operation after Trump lost his patience in negotiation. USD is receiving steady haven bids and seen driving USD/JPY close to May high at 157.94. USD/JPY is trading 0.07% higher at 157.72. Else, EUR/USD is down 0.04% and GBP/USD is down 0.06%.