Europe Summary and Highlights 31 July
USD/JPY lift limited, BoJ Ueda touch hawkish
EUR/USD held around 1.15 options, EZ HICP up as expected
Europe
Dollar slightly supported by USD/JPY’s modest post intervention drift up, though the latter has faded and the pair up only around 0.2% now.
BoJ Ueda’s press conference was a little hawkish, with comments such as ‘will hold careful discussions at next meeting onwards with risks of inflation overshooting more than in past in mind’. Seen as slightly increasing risks of a move in Sep vs Oct, with Sep odds now up to more than ¼
EUR/USD tending to stay fairly tight to particularly large 1.15 expires today.
EZ HICP 2.9%y/y from 2.8%, in line with expectations. France Jul HICP 2.4% from 2% (mkt 2.1%).
Asia Session
The steady Japanese labor report did not affect the JPY as market participants stay laser sharp about the BoJ decision. The suspected intervention, a classic five figure move, has seen partial recovery. Strong regional sentiment seems to have given a push. As per forecast, BoJ kept rates unchanged at 1%. It is voted 8-1 with Takata suggesting a quicker response from the BoJ on demand driven inflation. However, the CPI forecast is sending a mixed signal on lowered 2026 CPI and marginally revised higher 2027 CPI. USD/JPY is trading 0.72% higher at 160.65.
It is a fascinating Friday with KOSPI rose by more than 17%, after Situational Awareness sold a big chunk of their portfolio to Citadel. You don't see that everyday despite the heavy concentration of Korean equity index. Regional equities in Japan and China are also upbeat while HK equities lag. U.S. major equities are also in the green. AUD/USD is down 0.02%, NZD/USD down 0.22%, EUR/USD down 0.16%, GBP/USD down 0.14% while USD/CAD rises 0.05%.