Europe Summary and Highlights 1 July
The USD weakened across the board through the European morning, with the JPY and CHF the best performers, both gaining around 0.5%, while riskier currencies were generally up around 0.3%, although the NOK matched CHF and JPY gains, and the SEK also slightly outperformed the EUR.
European morning session
The USD weakened across the board through the European morning, with the JPY and CHF the best performers, both gaining around 0.5%, while riskier currencies were generally up around 0.3%, although the NOK matched CHF and JPY gains, and the SEK also slightly outperformed the EUR. The CAD lagged behind, gaining only around 0.1%.
There was no particular trigger for USD losses in Europe, with worries about tariffs, the budget bill and more Fed easing all seen as underpinning the USD decline. The USD weakness/CHF strength prompted SNB governing board member to say that negative rates are an option, but there was no impact from his comments. The ECB’s De Guindos said that the ECB could ignore EUR strength this side of 1.20 which did nothing to halt the USD decline.
Data was fairly uneventful. Eurozone June CPI was in line with consensus and unchanged from May at 2.3% y/y core. Eurozone manufacturing PMI was revised only marginally higher, while the UK PMI was unrevised. German unemployment rose slightly less than expected and the unemployment rate was unchanged at 6.3%.
Asia session
The Q2 BoJ Tankan Index shows business resilience against the potential threat of U.S. tariffs. While short term outlook remain dim, it is better than Q1 figure. Inflation expectation is also above BoJ target rate. USD/JPY is trading down 0.23% to 143.65 with JGB yields sliding more than U.S. Treasury Yields.
Following momentum from previous session, major equity indexes are trading positively. Except Japanese equity indexes, which are negatively affected by potential U.S. tariffs, still at historically high level. AUD/USD is trading is down 0.16% at 0.6571. NZD/USD also down 0.02% at 0.6095 while USD/CAD is unchanged. Else, EUR/USD is down 0.03% and GBP/USD is up 0.05%. USD has been trading broadly stronger in the Asia session but abates throughout the session.