Europe Summary and Highlights 6 February
GBP and the EUR were weaker through the European morning.
European morning session
GBP and the EUR were weaker through the European morning. GBP/USD lost 80 pips, falling to 1.2410 ahead of the BoE MPC meeting, while EUR/USD fell 30 pips to 1.0360, still gaining some ground against the pound. The CHF also follower the EUR lower, but most other USD pairs were not much changed, although USD/CAD was slightly higher.
There was stronger than expected Swedish CPI data early in the session. This showed a sharp rise in the targeted CPIF measure in the flash January data to 2.2% against a market consensus of 1.6%, and triggered a 4 figure EUR/SEK decline to 11.31, although there was a mild retracement by the end of the session. German December factory orders were also stronger than expected, rising 6.9% after a 5.4% decline in November, but this had no market impact.
Asia session
On Thursday, we are seeing a relatively calmer start as we didn't hear anything new from tariff man. The Australian trade balance has come in softer at AUD 5085mn, with import beating export, suggesting a moderate recovery in consumption. Major equity indexes are mostly in the green with regional indexes leading and see AUD/USD down 0.31% at 0.6265, NZD/USD also down 0.33% to 0.5668 while USD/CAD rose 0.2% on soft oil.
BoJ hawk Tamura says that BoJ must raise short-term interest rates to at least 1% by the H2 fiscal 2025 and has kept JPY strong. While we are only two full hikes away from 1%, the hawkish rhetoric further reinforce market participants anticipation of another rate hike soon. USD/JPY is trading 0.18% lower at 152.31, creating the new yearly low at 151.80. Else, EUR/USD is down 0.15% and GBP/USD is down 0.12%.