European Summary and Highlights 10 July
The USD was generally a little firmer through a quiet European morning, particularly against the JPY.
European morning session
The USD was generally a little firmer through a quiet European morning, particularly against the JPY. USD/JPY gained around 10 pips from the open to 161.60, while EUR/USD was not much changed. EUR/JPY made another 32 year high at 174.91. GBP was the best performer, with GBP/USD rising 10 pips to 1.2805.
The main news was the Norwegian CPI data at the beginning of the session, which came in much weaker than expected at 2.6% y/y headline and 3.4% core. This triggered sharp NOK losses, with EUR/NOK up 7 figures on the session at 11.55.
Asia session
RBNZ kept rates unchanged at 5.5% and suggest inflation approaching target range."Restrictive monetary policy has significantly reduced consumer price inflation, with the Committee expecting headline inflation to return to within the 1 to 3 percent target range in the second half of this year." The RBNZ openly stated inflation is approaching target range in their title, which is a turn around from May's statement when they suggest rate would be higher for longer. It seems to suggest the Q2 CPI would likely tread lower. The forward guidance is changed to "The Committee agreed that monetary policy will need to remain restrictive. The extent of this restraint will be tempered over time consistent with the expected decline in inflation pressures." from "The Committee agreed that monetary policy needs to remain restrictive to ensure inflation returns to target within a reasonable timeframe." The RBNZ is signalling current inflationary dynamics are following their playbook and they are ready to ease when CPI reaches target range. NZD/USD sunk on release and is currently trading 0.56% lower at 0.6090 with session low at 0.6075. AUD/USD is up 0.07% at 0.6746 while USD/CAD slipped 0.04%.
U.S. Treasury and JGB yields are both higher across the curve with global risk sentiment broadly positive. The June Japan PPI continue to stay below 1% m/m at 0.2%, seems to have further lowering inflation expectations. USD/JPY is trading 0.1% higher at 161.44. The upside traction seems to be resuming and we could see another challenge of 161.95 July high. Else, EUR/USD and GBP/USD are up 0.06%.