Europe Summary and Highlights 22 July
European trading saw a choppy consolidation.
Europe
The USD continues to be well underpinned by high oil prices and concerns that the Fed could tighten in the autumn (68% probability of a 25bps September hike is discounted in the money markets). This has been most evident on USD/JPY in recent days and the underlying bias remains to test the USD upside.
Even so, European trading saw a choppy consolidation, with U.S. secretary of state Rubio indicating that talks with Iran are still an option. On USD/JPY, some traders are wary of FX intervention, given current levels. Elsewhere, GBP was little moved by June CPI in line with expectations.
Asia Session
While Japan's June export are double digits and beating estimate, import is also propped up by energy import to reach 25.4% y/y. It will likely put BoJ between a rock and a hard place as weak JPY's benefit are completely neutralized. USD/JPY is at historical level of 163.16, close to unchanged for the session.
The broader risk sentiment is undecided as Middle East uncertainty persist. AUD/USD gained some support from solid precious metal to trade 0.03% higher, NZD/USD is unchanged while USD/CAD slips 0.04% on higher oil. Else, EUR/USD and GBP/USD are up 0.09%.