Europe Summary and Highlights 21 October

European morning session

JPY weakness was the main theme in the European morning, with USD/JPY gaining around 60 pips to 149.95. Otherwise, there was relatively little movement, although the USD did make some modest general gains of around 0.1% elsewhere. There were initial losses for the scandis against the EUR, with EUR/NOK rising around 3 figures in early trade, but these gains were more than fully reversed by the end of the session, with EUR/NOK finishing the session 3 figures lower at 11.84. EUR/CHF also edged lower, with USD/CHF little changed.

There was no data of any real note, although German PPI fell 0.5% m/m in September. Yields generally edged higher, and the USD was perceived to be benefiting from the “Trump trade”, as Trump’s policies of extending tax cuts and raising tariffs are expected to lead to a less dovish Fed and a more negative growth outcome for the more open economies.

Asia Session

RBA deputy governor says he is being surprised by strong employment growth and monetary policy is ready to respond in either direction. It seems to further push back market participants expectation of a rate cut and supports the Aussie. The PBoC also cut 1 and 5yr LPR by 25bps as widely expected and supported the Chinese equities. AUD/usd is trading 0.15% higher at 0.6716, NZD/USD is also trading 0.16% higher at 0.6081 while USD/CAD is up 0.07%.

The USD/JPY kickstart the week on a choppy note. There were verbal intervention when the pair rose above 150 and seems to have kept the pair in check along with USD softening.  USD/JPY rose to 149.63 in early Asia before reversing to 149.25 currently. Else, EUR/USD and GBP/USD are unchanged.