Europe Summary and Highlights 19 September

European morning session

The USD lost ground against the riskier currencies through the European morning. EUR/USD gained almost half a figure to test 1.1180, while AUD/USD gained 35 pips to 0.6835, and USD/CAD also lost half a figure to 1.3540.

The best performer was the NOK, which fell 1% to 10.44, helped by the Norges Bank decision to leave rate unchanged at 4.5%, although it did moderate its hawkish rhetoric slightly. The SEK also outperformed the EUR, but EUR/CHF gained around 20 pips to 0.9450, reflecting the risk positive mood. USD/JPY was net unchanged after an early dip.

Asia Session

As market participants digested FOMC's 50bps cut, the sell the fact trade on USD continues as we see broad based strength in the greenback with a part of it vaporized as session progress. With U.S. Treasury Yields rising faster than JGB yields, USD/JPY once traded more than a percent higher at 143.94 but has since retreated to 143.19 now, still up 0.65% for the session. The gains in U.S. Treasury Yields have moderate while JGB yields little changed since, which seems to be contributing to the early gains being erased.

The broad risk mood is positive as market participants digest FOMC decision. Major equity indexes closed lower after volatile trading post FOMC. In this Asia session, it seems to suggest there is still buying interest out there as Fed cuts. The Australian August employment change remains solid and increased by 47.5k while unemployment and participation rate stayed at 4.2% and 67.1%. Some shine was taken away from the report as most of the employment gains came from part time opening. AUD/USD is trading 0.44% higher at 0.6793, NZD/USD is dragged by their Q2 GDP contraction of -0.2% q/q and is still up 0.14% to 0.6216 as the contraction had been previewed by RBNZ while USD/CAD slips 0.06% on higher oil. Else, EUR/USD is up 0.04% and GBP/USD is close to unchanged.