North American Summary and Highlights 14 June
Overview - EUR remained weak while JPY recovered from post-BoJ losses. The USD was mostly firmer, but ended off its highs.
North American session
USD/JPY saw an early dip below 157 but recovered modesty to around 157.30 through the session while USD/CHF slipped to 0.89. Elsewhere the USD saw early strength before a modest correction, with EUR/USD recovering to 1.07 after falling to 1.0670. GBP/USD remained weak, holding below 1.27 after an early break below, but USD/CAD fully reversed its earlier gains as AUD/CAD drifted lower.
There was not much news, though June’s Michigan CSI was weaker than expected at 65.6 from 69.1, the fall led by views on current conditions, while Fed’s Mester and Goolsbee welcome the May CPI data.
European morning session
The JPY recovered in the European morning after the overnight sell off, with USD/JPY dropping a big figure to just above 157, while EUR/JPY fell more than 150 pips to trade below 168. EUR/USD was also weak, falling half a figure to a low below 1.0680, with concerns around the French election continuing to weigh. EUR/CHF was similarly under pressure, also falling more than half a figure to a low below 0.9530, and EUR/GBP also fell although GBP/USD fell more, losing half a figure to 1.27.
Yields were generally lower, particularly in Europe, with German 10 year yields dropping 13bps. French yields fell less, and the France/Germany 10 year spread widened to 76bps – its highest since 2017. Equities also fell back, with European equities leading the way.
The only data of note was the Swedish CPI data for April which came in above expectation at 3.7% core and 2.3% headline. Initially this triggered some SEK strength but it was quickly reversed, and EUR/SEK finished slightly higher on the morning making the SEK the weakest currency over the morning.
BoJ governor Ueda’s press conference may have helped moderate the market’s reaction to the BoJ’s decision to leave policy unchanged, as he indicated that action was possible in July if inflation moved further towards target while indicating that the JPY’s weakness was putting some upward pressure on inflation.