Europe Summary and Highlights 26 May
Quiet session, EUR slightly firmer after Schnabel comments
European morning session
EUR/USD gained around 10 pips through the morning, helped by early hawkish comments from ECB board member Schnabel. USD/JPY gained 20 pips to 159.20 and EUR/CHF gained 15 pips to 0.9130, reflecting a generally risk positive tone as markets anticipate a US/Iran deal. USD/CAD was also marginally softer but GBP/USD and AUD/USD were little changed. However, while yields were generally lower except for the EUR, equities were also a little softer.
Asia Session
Explosions were heard in Iran earlier and was reported that U.S. forces sank two IRGC vessels and Iran launched anti-ship cruise missiles in response. The U.S. framed such action as defensive and suggest the ceasefire continues as both sides are heading towards the finish line of a deal. U.S. major equity indexes have erased most Monday gains on the renewed bombing. AUD/USD is trading 0.17% lower at 0.7163. NZD/USD is trading 0.42% while USD/CAD is trading 0.07% higher as both Brent and WTI rose by more than a dollar/b.
With no deal announced and explosions heard, market participants scaled back their optimism and sees the initial euphoria fading. BoJ's deputy governor reaffirmed their rate hike path in a testimony in front of the Diet but points out Middle East conflict to be key in timing. USD/JPY is trading 0.08% higher at 159.00. Else, EUR/USD slips 0.09% and GBP/USD slips 0.22%.