Europe Summary and Highlights 14 Jan

European morning session

The USD was generally weaker through the European morning, with USD/JPY dropping half a figure to 158.65 and EUR/USD 10 pips higher at 1.1655. However, price action was risk negative more than USD negative, as the AUD fell back, trading 15 pips lower to 0.6685, with equities generally weaker.

The JPY recovery was helped by more warnings about JPY weakness form Japanese officials, with FX diplomat Mimura and Finance minister Katayama saying they were concerned about JPY moves and were prepared to take appropriate action. But the lack of FX intervention so far suggests they may reluctant to pull the trigger with a snap election on the horizon.

There was no data of note during the morning, but bond yields were generally a little lower in line with the weaker risk tone.

Asia session

The JPY has continue to weaken on Wednesday's Asia session, mostly driven by sentiment on potential February snap election for Japan's lower house. Both the U.S. Treasury and JGB yields are higher and there has not been new headlines so far today. BoJ will be discussing bond buying operations in their Feb 26 meeting but there have not been clues of any surprises. USD/JPY is trading 0.17% higher at 159.32.

While the broader risk sentiment is performing individually despite U.S. easing Nvidia H200 export rules, metals are having their day. Both Gold and Silver are reaching new highs on geopolitical tension. The Aussie is well supported and see AUD/USD trading 0.25% higher at 0.6698. NZD/USD is also trading 0.14% higher while USD/CAD slips 0.03%. Else, EUR/USD is unchanged and GBP/USD is up 0.1%.