Europe Summary and Highlights 18 December
A generally quiet European morning saw some small USD gains across the board, and some initial GBP losses, but these were reversed by the end of the session.
European morning session
A generally quiet European morning saw some small USD gains across the board, and some initial GBP losses, but these were reversed by the end of the session.
EUR/USD slipped around 10 pips to 1.0495, while USD/JPY gained around 15 pips to 153.60. EUR/GBP rose 10 pips after the UK CPI data, stopping just short of 0.8280, but fell back by the end of the session to be 10 pips lower near 0.8260. The UK CPI data was marginally softer than expected at 3.5% y/y for the core, but the headline was in line with expectations at 2.6%, and with both significantly higher on the month due to base effects, UK front end yields actually rose slightly through the morning.
Asia session
The Australian government is forecasting higher debt, 23 billion worse than May at 117billion Aussie. It cited health, cost of living relief as one of the reasons for such revision. The Aussie seems to have been weighed down by this and see it dropping to new yearly low against the USD at 0.6315, down 0.3% for the session, NZD/USD also dragged 0.27% lower to 0.5738 while USD/CAD rose 0.12% as oil lost a few cents.
Japan November exports came in higher than expected at +3.8% y/y while imports missed estimate at -3.8% y/y. It continue to points toward attractive Japanese goods due to favorable exchange rate and domestic demand remaining weak. The market currently pricing in very little odds for a hike from the BoJ later tomorrow but we believe there is a good chance for them to do a 10bps tightening, given the current inflationary dynamics and trend inflation forecast. USD/JPY is trading 0.05% lower at 153.42 as market brace for any surprise from the BoJ. Major equity indexes are in the green, except Nikkei. U.S. Treasury yields are lower across the curve. Else, EUR/USD is up 0.1% while GBP/USD down 0.1%.