Europe Summary and Highlights 12 May
The USD gained ground across the board through the European morning, showing particular strength against the JPY and CHF as the US announced a trade deal with China with a reduction in reciprocal tariffs to 10% with other measures postponed for 90 days.
European morning session
The USD gained ground across the board through the European morning, showing particular strength against the JPY and CHF as the US announced a trade deal with China with a reduction in reciprocal tariffs to 10% with other measures postponed for 90 days. Though the U.S. is still imposing an extra 20% due to fentanyl, China will likely make some moves that could also help to reduce this. The news triggered general gains in riskier assets, with S&P futures gaining 1.2% in the morning, adding onto the 1.5% gain seen in Asia.
USD/JPY gained 2 big figures to trade above 148, and USD/CHF gained a bog figure to 0.8445. EUR/USD was also a big figure lower at 1.1115. The commodity currencies slightly outperformed, notably USD/CAD which only rose half a figure to 1.3970, while AUD/USD dropped half a figure to 0.64. GBP also outperformed, with EUR/GBP down 25pips to 0.8425. The NOK was the best performer of the European currencies, with USD/NOK little changed.
Asian session
Over the weekend, there seems to be positive development between the U.S.-China trade talks as we heard constructive remarks from both sides. The broad risk sentiment cheers on such development and see a jump at the opening bell. Apart from trade, Trump also says prescription drug and pharma prices will be reduced almost immediately by another executive order. USD/JPY jumped to 146.16 from 145.36 Friday close and is currently trading higher at 145.88.
The broad risk sentiment stays upbeat after positive remarks from both the U.S. and China side. While market participants patiently await for the joint statement, U.S. major equity indexes are cheering for the development with an average gain of 1.5% from Friday's close. Regional equities in China and HK are also in positive territory but off session high. AUD/USD is trading 0.26% higher at 0.6427 with a 10 pips opening gap, NZD/USD is unchanged from the 0.25% opening gap at 0.5952 while USD/CAD is down 0.08% from Friday's close. Else, EUR/USD is down 0.17% and GBP/USD down 0.13%, both haven't closed the gap lower yet.