Europe Summary and Highlights 28 July
USD remains underpinned on nervousness into the Fed meeting
CHF nudging out the lows, talk on extended SNB zero rates
Oil and NOK off, techs hit overnight
Europe
Relatively contained European morning for FX, the market still looking to sit tight until the key Fed meeting later in the week. The dollar still retains it edge and EUR/USD is nearer 1.1350 than 1.14 now. There is definitely a very defensive mindset against hawkish surprise across both bonds and FX into the meeting.
CHF little changed on the morning but still inching out new 1yr+ lows vs the dollar. The SNB declined to comment on reports that it expects to keep interest rates unchanged until end 2027. CHF/JPY remains quite an interesting watch – a very slow rolling top for some months now.
Otherwise, NOK still on the back foot (- ½ %) with Brent down $2 ½ as it continues lower lows and highs so far on this move.
AUD retains its slight overnight dip against the backdrop of the softer metals and tech weakness. Nasdaq future currently -0.8%.
Asia Session
Before the August RBA meeting, RBA governor Bullock is pouring cold water on asking whether tightening already delivered enough, followed by the lagging effect on tightening. While she clearly state more upside risk from energy, softer domestic demand is also mentioned. It seems to be lowering the anticipation of market participant's imminent hiking expectation. AUD/USD is trading 0.35% lower at 0.6964. NZD/USD is trading 0.18% lower while USD/CAD is unchanged on slightly lower oil.
Regional equities are facing a bloodbath with KOSPI down more than 10% again, closely followed by a 4.5% drop in Nikkei. It is spreading to U.S. major equity indexes but a lesser magnitude. Else, USD/JPY and GBP/USD are also unchanged wioth EUR/USD up 0.02%.