European Summary and Highlights 21 Feb

European morning session

A very quiet European morning session saw little net change in the G10 currencies. Although the USD did manage some gains in the early part of the session, it reversed most of these by the end of the morning. Initial moves saw he USD gain 0.1-0.2% across the board, but by the end of the session it was only marginally firmer against the EUR and GBP, and unchanged against the JPY, but AUD/USD did hols at 0.6560 after an open above 0.6570. Th eCHF was the morning’s strongest currency, with EUR/CHF falling to 0.9505 from 0.9530, so that USD/CHF also moved around 15 pips lower to 0.8805.

Newswise there was nothing of note. Although the UK reported the biggest monthly budget surplus on record at GBP16.7bn in January, this was slightly below market consensus so had no market impact.

Asia session

The Australian Q4 2023 Wage Price Index has met estimate at +0.9% q/q and beat estimate y/y by 0.1% to +4.2%. On a q/q basis, we are seeing Australian wage slows along with the easing of labor market which supports RBA decision to keep rates on hold. However, on Wednesday, the move in the Aussie is guided by belated rate cut optimism in the Chinese and Hong Kong Equity market and strength in the Yuan (strongest for Feb). The HSI is up more than three percent where SSE gained close to 2% after opening lower. AUD/USD is trading 0.26% higher at 0.6566, NZD/USD up 0.36% to 0.6186 while USD/CAD slipped 0.09% with oil gaining 10 cents.

Elsewhere, we have Toyota saying wage negotiations with unions continue and U.S. House Republicans are not optimistic towards another bill to keep the government from shutting down. USD/JPY is unchanged at 150 figure as we are far from the result of wage negotiation and JGB yields falling along U.S. Treasury Yields. EUR/USD benefited from the softer USD to trade 0.06% higher and GBP/USD is up 0.07%.