Europe Summary and Highlights 10 March
JPY strength was the main feature of the European morning, as equities and bond yields fell in Europe while Japanese yields held the gains seen overnight.
European morning session
JPY strength was the main feature of the European morning, as equities and bond yields fell in Europe while Japanese yields held the gains seen overnight. USD/JPY dropped 70 pips to 146.90, while the USD was otherwise fairly steady, but gaining a little ground against the CAD.
Early on the NOK was the best performer, with EUR/NOK dropping 10 figures to 11.65 after a much stronger than expected February Norwegian CPI print. This showed CPI at 3.6% y/y in February against 2.8% expected, with the core rate also much stronger than expected at 3.4% versus 2.9% consensus. This also looks to have triggered some unwinding of short NOK/SEK positions, with EUR/SEK rising 5 figures to 10.98. NOK/SEK gained more than 1% to 0.9410.
The other main data was German industrial production, which showed a larger than expected 2.0% rise in January, but this was correcting a 1.5% December decline.
Asia session
The Japan January Labor Cash Earnings stayed solid above 2% at 2.8% y/y. Although it is lower than the blockbuster 4.4% in December, the 2.8% y/y wage growth is good enough to support another rate hike. However, the BoJ will very likely wait for more confirmation in the March Wage Negotiation before another one. USD/JPY is down 0.28% to 147.62 with a session low at 147.08 as U.S. Treasury Yields still away from closing the opening gap lower while JGB yields continue to march higher.
Regional sentiment is soft on Monday led by losses in the HSI and Chinese equities (dragged by China's deflation in February), U.S. three major equity indexes are also in the red while Japanese equities are in the green. The FX market is relatively quiet except the JPY pairs with some majors have a minor opening gap but at least closed once within the session. AUD/USD is trading unchanged at 0.6307 after trading up and down 20 pips, NZD/USD is up 0.06% to 0.5712 while USD/CAD slips 0.03%. Else, EUR/USD is down 0.02% and GBP/USD is down 0.11%.