Europe Summary and Highlights 18 February
A quiet European morning saw USD/JPY fall a modest 10 pips to 151.75, USD/CAD down 10 pips to 1.4190 and USD/CHF down 10 pips to 0.9010, but there was little other net movement.
European morning session
A quiet European morning saw USD/JPY fall a modest 10 pips to 151.75, USD/CAD down 10 pips to 1.4190 and USD/CHF down 10 pips to 0.9010, but there was little other net movement. EUR/USD was unchanged near 1.0460.
GBP/USD finished slightly lower just below 1.26 after initially gaining ground on the back of stronger than expected UK labour market data. The data showed slightly more employment than expected and a fall in the unemployment rate to 4.4% in December, but average earnings growth was unchanged as expected at 5.9%. EUR/GBP initially dropped around 10 pips below 0.83 but recovered to be slightly higher at 0.8305 by the end of the session.
Swedish CPI was as expected with the targeted CPIF rising 2.2% y/y. EUR/SEK edged a touch lower on the news but recovered to be little changed just above 11.21.
Asia session
Market participants were pricing in a RBA cut on Tuesday and was seen front running the move to offer the Aussie against the USD. The RBA decided to cut the cash rate by 25bps to 4.1% in the Feb 18 meeting, seeing rates remain restrictive after the cut and signals data dependency going forwards. RBA has also revised inflation forecast for the first half of 2025 lower to 2.4% y/y from 2.5%, trimmed mean at 2.7% from 3% but revised 2026/27 headline inflation higher. They see cash rate to be at 3.6% by year end 2025 and at 3.4% June 2026 before returning to 3.5%, a terminal rate so far. The key change of stance from RBA came from softer than expected inflation and GDP growth. AUD/USD was once down 0.38% at 0.6335 and was seen reversed to recoup partial gains at 0.6355, NZD/USD was also dragged 0.54% lower at 0.5705 while USD/CAD rose 0.18%.
The USD is trading broadly higher on Tuesday. Initially, USD/JPY dipped on Japanese FM's comment on the Q4 GDP but quickly reversed higher as session progress. USD/JPY is trading 0.38% higher at 152.07 with both the U.S. Treasury and JGB yields higher. Else, EUR/USD is down 0.3% and GBP/USD is down 0.25%.