Europe Summary and Highlights 14 May

European morning session

The USD fell back across the board through the European morning, with the JPY the best performer. USD/JPY dropped 110 pips to 145.90, while EUR/USD gained 60 pips to 1.1250. GBP/USD rose 40 pips to 1.3350, while the commodity currencies made more modest gains. Scandis and CHF were steady against the EUR.

There was no obvious rigger for USD losses, with no data of note. Final CPI data from Sweden, Germany and Spain was in line with preliminary estimates. The moves look to be unwinding of short term long USD positions taken on the back of the recent positive trade news. Equity markets were mildly weaker and US yields lower.

Asia session

The Australian Q1 wage price index has come in stronger than expected at +0.9% q/q and +3.4% y/y. As the Australian labor market remains choppy, wage price is surprisingly solid. The Australian wage growth has historically being lagging behind the strength of labor market and this Q1 data points to a lower likelihood the RBA will cut imminently. AUD/USD is trading unchanged at 0.6470, NZD/USD is 0.05% higher at 0.5940 while USD/CAD slips 0.06%. 

The Japan April PPI increased 0.2% m/m and 4% y/y, continue to suggest rising input cost. While the magnitude of transferal to CPI has been slow, it continues to point towards more input cost for the Japanese business owners.  USD/JPY is trading 0.35% lower at 146.94 with JGB yields outperform U.S. counterpart. Else, EUR/USD is up 0.03% and GBP/USD is unchanged.