Europe Summary and Highlights 21 July
Middle east remains the focus with high oil prices, but a new 10 day ceasefire proposal being considered.
Europe
The USD moved sideways in Europe, with elevated oil prices supporting the USD but USD bulls nervous that the new 10 day ceasefire proposals could see a decline in oil prices and the USD into the end of the week/early next week. Traders are wary that Trump wants an off ramp to avoid higher gasoline prices persisting for too long.
GBP was in focus in Europe, with a small move higher across the board. New PM Burnham recommitment to the existing fiscal rules is seen as more important than a small amount of high profile but not costly government measures (e.g. this morning’s scrapping of VAT on electricity). However, by mid morning GBP moved lower, as fiscal concerns remain.
Asia Session
The red hot New Zealand Q2 CPI has supported the Kiwi. Arriving at 4.1% y/y, it beats most estimate and once again overshoots RBNZ's target range. Energy is the dominating factor that accounted for 1.2% y/y growth. In RBNZ's own sectoral factor model, they are seeing Q2 inflation at 2.7% y/y only. NZD/USD is still trading 0.46% higher at 0.5865. Market participants remain hopeful as mediators are persuading U.S.-Iran to back to the deal. Major equity indexes are upbeat and see AUD/USD trading 0.17%, supported by previous metal performance while USD/CAD rises 0.02% on softer oil prices.
Else, USD/JPY and EUR/USD is little changed by less than 0.05% and GBP/USD up 0.13%.