Europe Summary and Highlights 10 Jun
Oil still checked even with exchanges, hope pinned on nuclear detail progress
Risk markets still seeing some pressure, though Nasdaq remains off yesterday's spike low
Some NOK support from CPI, but Norges Bank ahead of the curve
FX market remains in cautious n/t consolidation, US CPI next focus
European morning session
While the news and broader asset market backdrop remains rather noisy with various cross-currents in play, FX price action is pretty becalmed with further consolidative trading still predominating. EUR/USD is still working off its intraday oversold posture in the 1.1550 area while higher beta pairs are off only mildly versus the dollar and within recent bars too.
Recent military exchanges have been digested by the market with oil trading down around -0.5%. There is more focus on NYT suggestions that some progress is being made on compromises with the key nuclear themes.
Overnight saw the Kospi off 5%, and the Nasdaq future is down over 1% although also still well clear of the spike low test in yesterday's wide bar. Copper though, for instance, is at the recent lows which is the key next range support area. As such USD/risk does have support, but it's mild so far this morning with no fresh breaks while the likes of VIX are still contained (<20). US CPI data the next focus and test.
Scandi data tending to come in on the upside this morning but with provisos. Norway core CPI on the top side of consensus at 3.4%y/y, albeit with that core measure including food and looking less elevated in smoothed monthly trend terms. The Norges Bank is already well ahead of the curve. NOK got a slight lift on the release.
Swedish orders, production and monthly GDP also on the firm side and does suggest a good Q2 shaping up, but again that is needed and then some for the rest of the year to be getting close to Riksbank expectations and survey projections have been less positive.
In other news, Reuters reports that BoJ's Ueda has been hospitalised and is expected to miss the June 15-16 meeting.
Asia Session
Things begin to escalate after U.S. Army Apache helicopter being downed over the Strait of Hormuz. U.S. launched three waves of airstrike against Iranian air defense, radar and ground control sites, then Iran retaliated with Bahrain, Jordan and Kuwait airstrikes on U.S. military bases. It seems to be a serious escalation that will derail talks, risk asset have already taken a hit and may rotate further lower. AUD/USD is trading 0.21% lower at 0.7013. NZD/USD is trading 0.07% lower while USD/CAD slips 0.02% as oil rotating lower after the initial spike.
One would expect great volatility in the good old days for USD/JPY when uncertainty rises. But as USD being favored for haven seeking and JPY dragged by fiscal worries, USD.JPY kept marching north. Interestingly, USD/JPY is unchanged on Wednesday despite rising risk aversion. It seems market participants are well aware of the hawkish risk from the BoJ next week and potential intervention, to avoid getting wrong footed in JPY shorts. USD/JPY is unchanged at 160.36. Else, EUR/USD is up 0.05% and GBP/USD is up 0.06%.