Europe Summary and Highlights 2 January
The USD was generally stronger through the European morning, gaining ground across the board.
European morning session
The USD was generally stronger through the European morning, gaining ground across the board. EUR/USD hit a new 2 year low at 1.0313, while USD/JPY moved back above 157 after edging lower overnight helped by some verbal intervention from Japanese officials. GBP showed the most pronounced weakness, with GBP/USD falling to 1.2450 from 1.2530, while the scandis performed relatively well, nearly holding their own against the USD.
There was final December manufacturing PMI data from the Eurozone and the UK, both of which showed small downward revisions. Eurozone money data was slightly stronger than expected, with M3 rising 3.8% y/y, but personal loans were as expected at 0.9% y/y.
Asia session
2025 began with vibrant start in USD/JPY despite Japanese holiday. While thin liquidity may have exacerbated the move, USD/JPY jumped from session low to high 157 before rotating lower to 157.05 now, down 0.16% for the session. There is little fresh catalyst, except 10yr U.S. Treasury Yields rebounded from the opening gap while 2yr stay low, for the move and seems to be driven mostly by repositioning after the Christmas holidays for some market participants.
On the first trading day of 2025, we are seeing a divergence in the equity space with Chinese and Hong Kong equites sunk while U.S. equities gains. The dent in regional sentiment seems to be derived from the miss in private manufacturing PMI (CAIXIN), which managed to stay in expansion. AUD/USD shrugged off sour regional sentiment to trade 0.5% higher at 0.6219 as USD is broadly soft, NZD/USD also up 0.4% to 0.5616 while USD/CAD slipped 0.03% with oil gently higher. Else, EUR/USD is up 0.14% and GBP/USD is up 0.18%.