North American Summary and Highlights 24 July
Overview - USD/JPY fell but ended off its lows as the USD was supported by rising long end yields as the UST curve steepened.
North American session
The USD ended the session little changed after seeing early losses, largely on USD/JPY, before seeing a late bounce as long end UST yields spiked. The UST curve saw steepeners inspired by a Bloomberg article from former New York Fed Chairman William Dudley calling for the Fed to cut rates in July.
USD/JPY fell to a low of 153.11 before recovering to 154, still down on the day. Outside USD/JPY morning trade was mostly stable apart from a modest bounce above 1.38 in USD/CAD on what was a largely as expected 25bps Bank of Canada easing, though with a fairly dovish tone. The post-BoC bounce in USD/CAD was however largely erased before the late USD bounce lifted USD/CAD to 1.3815. AUD/USD also saw a late dip to .6580 from .66. EUR/USD saw only modest late slippage, to near 1.0840 from a little above 1.0850. EUR/GBP and EUR/CHF sustained European losses.
Mixed US data had a limited impact. June’s advance goods trade deficit narrowed to $96.8bn from $99.4bn. July S and P PMIs saw manufacturing weaker at 49.5 from 51.6 but services strong at 56.0 frim 55.3. June new home sales, down 0.6% to 617k, were weaker than expected.
European morning session
The EUR saw modest losses through the European morning after weaker than expected German and Eurozone PMI data. Composite Eurozone PMI dropped to 50.1, the lowest since February, while UK PMI outperformed, with the composite rising slightly more than expected. EUR/USD fell to 1.0840 after opening at 1.0850, while EUR/GBP slipped below 0.84 after opening at 0.8415. USD/JPY was net slightly higher on the session after falling back in Asia, helped by a modest recovery in equities in the European morning. Earlier, the German Gfk consumer climate index rose to -18.1, its best since April 2022.