European Summary and Highlights 15 Dec

European morning session

The EUR fell back across the board through the European morning, following weaker than expected Eurozone PMIs. EUR/USD fell from 1.10 to 1.0950 before bouncing modestly. EUR/GBP also fell from 0.8610 to 0.8580 as UK composite PMI came in stronger for the second consecutive month. GBP/USD was slightly higher on the day at 1.2780. Otherwise, the USD was slightly softer, with USD/JPY falling to 141.70. The EUR also lost ground against the scandisk, with EUR/NOK down 9 figures to 11.45 and EUR/SEK losing 7 figures to 11.20.

The Eurozone composite PMI fell to 47.0 in December, reversing half the November recovery, while the UK composite PMI rose to 51.7, its highest since July.

Asia session

On Friday, the PBoC has fixed the onshore Yuan at the strongest rate since June, seeing both on/offshore Yuan capitalizing it and trades stronger against the USD. It is partially supported by positive but mixed Chinese economics data, which shows industrial surprised to the upside and Retail Sales continue to grow strongly but miss the estimate. It is welcoming data for the Chinese economy, supported the Yuan and indirectly the Aussie. With regional equities on a positive note, the AUD/USD is 0.23% higher at 0.6713, NZD/USD is 0.06% higher while USD/CAD slipped by 0.07% with oil steady.

U.S. Treasury Yields has rebounded in the Asia session across the curve, so as JGBs. All eyes will be on BoJ meeting next week where we do not expect a change in policy but forward guidance instead. A surprise move will put a strong bid behind the JPY for it signals the BoJ is much more hawkish than they present, unless it is well supported by jumping wage that is unlikely to show in Q4. With BoJ exiting ultra-loose policy soon and the Fed tilting dovish, major rationale to stay long USD/JPY seems to be perishing and the correction may continue. USD/JPY is trading 0.13% lower at 141.64. Elsewhere, EUR/USD is unchanged for the session and GBP/USD is down 0.02%.