European Summary and Highlights 02 Feb
The USD was generally weaker through the European morning, except against the JPY, with USD/JPY gaining around 20 pips to 146.60.
European morning session
The USD was generally weaker through the European morning, except against the JPY, with USD/JPY gaining around 20 pips to 146.60. EUR/USD was up 10 pips o 1.0885, and there were similar gains for GBP and AUD. However the NOK fell back with EUR/NOK rising around 4 figures to 11.39, perhaps helped by another small rise in unemployment. The strength of the riskier currencies against the USD, and particularly the JPY, was no doubt helped by solid equity market performance following the new high seen in the S&P 500 in the US last night.
Datawise there was little of note, although French industrial production rose much more than expected at 1.1% in December.
Asia session
While geopolitical tension looks likely to escalate over the weekend as U.S. is expected to conduction military action against Iran, risk asset does not seem to be particularly taking a hit. Instead, the hope of a cease fire between Israel and Hamas had driven equity significantly higher in the second half of Thursday. With USD staying low and commodity steady, the AUD/USD is leading the pack with a 0.35% gains to trade at 0.6595, NZD/USD also caught a small bid of 0.11% higher at 0.6150 while USD/CAD slipped 0.08% to 1.3374 with oil clawing back 30 cents.
USD/JPY has quietly tread lower despite choppy USD trading and it does not seem to be derived from the change in risk sentiment as market participants has been favoring the USD when seeking haven for the past year. The key driver remains in yield differential which is expected to further narrow. Yet, it will not be a smooth path and we heard from Powell earlier in the week as he push back against early cut speculation and all eyes remain at the spring wage negotiation in Japan. USD/JPY is trading 0.04% higher at 146.47. Elsewhere, EUR/USD and GBP/USD is up 0.05%.