Europe Summary and Highlights 9 Jun
Consolidation with FX cautious, even with the oil back off as US short end holds on to higher yields
Lots of uncertainties remain over the immediate Iran and risk market pictures
European morning session
Pretty quiet European morning in terms of news and price action.
While overnight saw a good risk bounce in Asia (Kospi +8%), and oil continues to slip back towards the recent range downside, following on from latest Israel-Iran cessation (-2%), FX is a little more cautious, consolidating rather than reversing the Friday breaks.
US short end yields sticking at the higher yield levels (2s still circa 4.15%, around the close for the last couple of days). S&P future around +0.4%.
AUD/USD checked by 0.7080 before backing off and EUR/USD holding to the 1.550~ area. Higher beta NZD holding on to the best gains from overnight.
German industrial production 0.4%m/m (mkt 0.5%). Trade balance EUR14.5bn (mkt 15.3bn), with exports and imports
Asia Session
We have arrived to the second day of the week yet we are short from seeing any sign of improvement in the geopolitical field. One can be partially comforted on the somewhat lack of escalation as Iran seems to stop their tit for tat retaliation but we are far away from normalization. Trump di make some remark that is upbeat yet not reliable. U.S. equities are still recovering while regional equities perform individually. AUD/USD is trading 0.16% higher at 0.7056. NZD/USD is trading 0.46% higher while USD/CAD slips 0.09%. Both Brent and WTI are lower for the session.
USD/JPY is staying above 160 and we haven't heard much intervention yet. It is mostly because the latest rally past 160 is geopolitical event driven and the pace isn't explosive. The BoJ could be playing it slow as they believe their potential hike in June could curb the losses in JPY with some hawkish forward guidance. USD/JPY is trading unchanged at 160.16. Else, EUR/USD is up 0.1% and GBP/USD is up 0.19%.