Europe Summary and Highlights 7 July
The USD made general gains through the European morning.
European morning session
The USD made general gains through the European morning. ER/USD dropped 40 pips to 1.1730 and USD/JPY gained 45 pips to 145.45. GBP gained a little against the EUR in sympathy with the USD, with EUR/GBP dropping to 0.8630 from 0.8640, although GBP/USD also lost 30 pips to 1.3590.
The SEK was the best performer in the session, with EUR/SEK dropping 1% to 11.17 after the Swedish CPI data early in the session showed a much larger than expected rise to 2.9% in the targeted CPIF measure, further reducing expectations of an August Riksbank rate cut. Otherwise the only significant data was German industrial production, which came in stronger than expected at 1.2% m/m, suggesting that the trend is continuing to improve gradually, but this had no FX markt impact. Eurozone Sentix investor confidence improved in July, reaching its highest since February 2022, while Eurozone retail sales were marginally above consensus at -0.7% m/m in May.
Asia session
Over the weekend, we have renewed geopolitical tension around the red sea, OPEC increasing oil output and Trump's "unofficial" extension of tariff negotiation. market reacted by opening bids of risk asset and offering oil. As session progress, Trump's remark "Any Country aligning themselves with the Anti-American policies of BRICS will be charged additional 10% tariffs", cooled market optimism. U.S. major equity indexes are still higher than Friday's close while regional equities are in the red. AUD/USD is down 0.58% lower at 0.6516, NZD/USD is down 0.69% to 0.6016 while USD/CAD rise 0.19%.
Labor cash earning growth disappoints in May as it only grew 1% y/y, citing a big fall in bonus. With real wage staying negative, the rebound of household spending last month may not be sustained. We will have to and see if it is the impact from U.S. Japan trade uncertainty and could worry the BoJ. USD opened mostly lower and see USD/JPY trading 0.21% higher than Friday's close at 144.81 currently. Else, EUR/USD is down 0.03% and GBP/USD is down 0.16%. Major currency pairs have tried to close their opening gap and succeeded at least once.