North American Summary and Highlights 11 Jul
Overview - The USD was mostly little changed, awaiting fresh tariff developments, though USD/JPY rose with UST yields. Weak GDP data weighed on the GBP but a strong rise in employment gave the CAD some support.
North American session
The USD saw little overall change in North America. Equities saw only modest losses after Trump’s tariff escalation with Canada, but UST yields picked up, and that lifted USD/JPY above 147 to touch 147.50. EUR/USD remained close to 1.1690 awaiting news on tariffs, but EUR/GBP moved above .8650 as GBP/USD remained under pressure, seeing lows below 1.35.
There was no significant US data but June Canadian employment sharply exceeded expectations with a rise of 83.1k, which saw USD/CAD slip from 1.37 to near 1.3650, where it was trading before the tariff escalation. A rebound above 1.37 followed, before eventually setting near 1.3685.
European morning session
EUR/USD edged 15pips higher to 1.1690 but USD/JPY gained 10 pips to 147 in the European morning. GBP/USD was not much changed with EUR/GBP rising 15 pips to 0.8625 after UK May GDP data came in weaker than expected at -0.1% on the month, against a consensus estimate of +0.1%. The weakness was slightly offset by an upward revision to March from 0.2% to 0.4%, so the 3m/3m gain was actually slightly above consensus at 0.5%, but the underlying trend is nevertheless weakening with the May decline following a 0.3% decline in April. Nevertheless, UK yields edged slightly higher as did US and European yields.
Otherwise there was little news of note. French CPI was revised up slightly to 0.9% y/y in June from 0.8% on an HICP basis, and ECB comments from Schnabel and Panetta were respectively hawkish and dovish so broadly balanced each other out.