Europe Summary and Highlights 2 July
The USD was generally stronger through the European morning, with USD/JPY and GBP/USD leading the way.
European morning session
The USD was generally stronger through the European morning, with USD/JPY and GBP/USD leading the way. USD/JPY rose 45 pips to 144.20, GBP/USD fell 50 pips to 1.3690 while EUR/USD fell just 20 pips to 1.1770. GBP weakness came with some steepening of the UK yield curve which may reflect the failure of the government to pass spending cuts through parliament on Tuesday.
There wasn’t much data of note, but the Italian unemployment rate showed a surprise sharp rise to 6.5%. The ECB’s Wunsch, the Belgian central bank governor, made comments favouring a mildly supportive ECB stance due to weak growth and inflation, but this produced no real reaction with EUR yields slightly higher.
Asia session
Trump says that Israel has agreed to a 60-day Gaza ceasefire proposal. However, it remains to be accepted by Hamas. While we love to see progress for peace, it is hard to tell if the terms are good enough for Hamas. USD/JPY is trading 0.21% higher at 143.7 on broad USD strength.
Australian May retail sales continue to disappoint at 0.2% m/m and 3.3% y/y. The soft spending will remain a drag to the overall recovery in the Australian economy and could reinforce RBA’s stance in further cutting. AUD/USD is trading 0.08% lower at 0.6578 with regional equities performing individually, NZD/USD is also down 0.04% to 0.6096 while USD/CAD rose 0.02% to 1.3649. Else, EUR/USD is down 0.09% and GBP/USD is down 0.06%.