Europe Summary and Highlights 8 January
The USD was generally firmer through the European morning, with EUR/USD losing around 35 pips to 1.0315, and USD/JPY gaining 25 pips to 158.30.
European morning session
The USD was generally firmer through the European morning, with EUR/USD losing around 35 pips to 1.0315, and USD/JPY gaining 25 pips to 158.30. The EUR suffered from weaker German and Eurozone data. German retail sales and factory orders data for November both came in weaker than expected in m/m terms, although revisions mean that retail sales were stronger in y/y terms than the consensus. Even the big 5.4% decline in factory orders wasn’t clearly weak in trend terms after strength in recent months, but it was well below expectations and helped to drag the EUR lower. The European Commission Eurozone survey of business and consumer confidence was also weak, with economic sentiment falling to its lowest since the pandemic. The USD’s strength also owed something to Tuesday’s strong US JOLTS and ISM services data.
The SEK was the weakest currency on the morning as Swedish CPI came in weaker than expected in December, rising just 0.8% y/y and 1.5% on a core basis, increasing the chance of a 50bp Riksbank rate cu in January. EUR/SEK gained around 3 figures to 11.53 before dropping back.
Asia session
While the Australian November monthly CPI edged higher to 2.3% from 2.1% previously, the trimmed mean CPI slipped to 3.2% from 3.5%. This is the metric RBA favored in the last meeting and could points toward earlier easing from the bank if such persists. AUD/USD is down 0.04% to 0.6228, back from session low at 0.6211. NZD/USD also down 0.02% while USD/CAD slipped 0.12% as oil up thirty cents.
After the initial suppression from Tuesday's verbal intervention form Japan PM, USD/JPY is regaining traction as we hear little fundamental shift to the equation. However, we are beginning to see 10yr JGB reaching decade high. If momentum continues, the strength in USD/JPY shall be short-lived. USD/JPY is trading 0.09% higher at 158.18. Regional sentiment tanked with both the Chinese and HK equity indexes down more than 1.5% on disappointing support policy from NDRC while U.S. equity indexes a tad higher after the overnight slump. Else, EUR/USD is up 0.13% and GBP/USD up 0.05%.