European Summary and Highlights 22 Mar

European morning session

The USD was generally firmer through the European morning, with GBP suffering the most. GBP/USD fell 55 pips to 1.2585 from an open at 1.2640, with EUR/USD slipping 20 pips to 1.0820. There were similar declines for SUD and CAD but USD/JPY was not much changed near 1.5155. Scandis were also both weak, with EUR/SEK and EUR/NOK both gaining around 3 figures form the open.

UK February retail sales early in the session were slightly stronger than expected at flat m/m, but of little relevance after the volatility of the previous two months. The German IFO business climate index was stronger than expected, with both current conditions and expectations improving, but had only a very modest positive impact on the EUR.

Asia session

USD/JPY stay at recent high after a volatile post FOMC session. U.S. Treasury Yields slip while JGB yields are higher. We got more remarks from Ueda but it is only about general action after exiting ultra-loose monetary policy. Suzuki also did his rounds of jawbone intervention and see USD/JPY retreated from session high. National y/y CPI see a rebound in February after inching closer to 2% in January. Less fresh food y/y CPI also rebounded to 2.8% from 2% while less fresh food and energy continues to moderate to 3.2% from 3.5%. We forecast all three categories to resume easing in the coming months. USD/JPY is trading 0.05% lower at 151.52 after challenging Oct 2022 high circa 151.94.

USD is trading broadly stronger on Friday's Asia session. Regional sentiment in China and Hong Kong tanks with HSI down more than 3%. On/offshore yuan are also seeing a sell off despite "national Team" stepping in. The antipodeans are bearing the brunt with AUD/USD down 0.7% to 0.6524 and NZD/USD down 0.54% to 0.6011, while USD/CAD rose 0.25% as oil slips further in Asia. Else, EUR/USD is down 0.26% and GBP/USD is down 0.13%.