North American Summary and Highlights 6 May
Overview - In a generally quiet session the USD held firm versus the JPY while modest slippage elsewhere faded.
North American session
The USD saw some early slippage in North America, but this subsequently faded. After a brief dip below 153.50 USD/JPY recovered to touch 154. EUR/USD advanced to 1.0790 before slipping back to 1.0770, and European slippage in EUR/GBP was largely reversed. Risk-sensitive currencies saw a marginal late dip when Israel stated Hamas’ acceptance of a cease fire proposal was not sufficient, but generally held firm.
Comments from Fed’s Barkin and Williams gave little away on the rates outlook. The Fed’s Senior Loan Officer Opinion Survey was little changed from the previous quarter, maintaining a generally resilient tone, and had little impact.
European morning session
USD/JPY’s push higher ran out of steam in Europe. Views are mixed with some wanting to test the upside and feeling the BOJ intervention risk is low until 156/57. Others feel that USD/JPY is seeing a technical correction and likely to test 152 in the coming days/weeks.
EUR/USD was little changed in early Europe. However, the softer than expected U.S. employment report has seen money markets moving towards discounting two rate cuts from the Fed in 2024. In turn this provides a little more EUR protection, given the ECB is likely to start easing in June. GBP/USD mover up to 1.2580 from 1.2540 but EUR/GBP held above .8550.
Elsewhere, the AUD remained firm, with sentiment improving towards China markets. The sense is that China markets are oversold and the China/HK equity markets have recently attracted some fund managers rotating out of Japan.