Europe Summary and Highlights 7 April
The USD was slightly firmer through the European morning, mainly against the European currencies.
European morning session
The USD was slightly firmer through the European morning, mainly against the European currencies. EUR/USD lost more than half a figure to hit a low of 1.0950, and GBP/USD saw a similar decline to 1.2850. USD/CAD also gained around 30 pips to 1.4260, but USD/JPY, USD/CHF and AUD/USD were little changed. EUR/NOK was firmer, moving briefly above 12 to hit its highest since August last year.
The main driver remained equity markets, with European markets cratering once again, losing more than 5% on average and driving bond yields lower.
Datawise, German industrial production fell 1.3% in February, correcting the 2.0% January rise. Eurozone retail sales rose 0.3% m/m in February. But the Sentix European investor confidence index unsurprisingly fell sharply in April, hitting its lowest since October 2023.
Asia session
A catastrophic start for the week with risk asset slumps on realization Trump isn't playing with his "penguin" tariffs. Japanese equity indexes hit a wall first after the circuit breaker is activated on a 7% drop. U.S. major equity indexes are down 3-4% while we wait the Chinese market to be back from holiday. USD/JPY opened sharply lower at 145.52 from Friday' close of 146.8, with a session low at 144.82 and is currently trading at 146.13, briefly closing the opening gap. Japan February labor Cash earning remain strong at 3.1% y/y but that does not seem to catch market participant's attention for now, given tariffs will be negatively affecting BoJ's plan in further tightening.
Major equity indexes are off session low as the Asia session progress. There has not been any positive headlines from the U.S. tariff, thus it only seems to be flow buying. Regional equities index in Hong Kong was once down more than 10% with the Japanese and Chinese equities doing slightly less worse. AUD/USD is down 0.32% from Friday's close but is actively seeking to close the gap at 0.6020, NZD/USD similarly down 0.36% from Friday's close while USD/CAD has closed the much smaller gap and is trading 0.03% lower at 1.4226. Else, EUR/USD have closed the gap and is trading 0.09% higher, GBP/USD still down 0.07%.