European Summary and Highlights 08 Feb
The USD was generally firmer through a largely newsless European morning, but gained most ground against the JPY, breaking above 149 towards the end of the session for the first time since November.
European morning session
The USD was generally firmer through a largely newsless European morning, but gained most ground against the JPY, breaking above 149 towards the end of the session for the first time since November. USD/JPY traded as high as 149.15 after an open at 148.60, although US equity futures retreated slightly form the highs. EUR/USD fell only around 10 pips to 1.0770 while AUD/USD dropped 20 pips to test 0.65.
On the crosses, NOK/SEK fell around 40 pips to 0.9860, while EUR/CHF edged slightly lower. The ECB Economic bulletin revealed nothing new, indicating that rates would remain at restrictive levels for as long as necessary.
Asia session
The big mover on Thursday's Asia session will be JPY pairs. The pairs jumped on Uchida's "dovish" speech as he does not expect very easy policy to change in a big way. The fact is, no market participants had expected the BoJ to hike rates aggressively with most settling below 0.5% and thus such spike will be short lived. There is nothing new in Uchida's speech, maybe except the BoJ stated there will be communication before policy changes, which wasn't the case for the past two "tweaks". USD/JPY jumped 0.28% higher to 148.58 with U.S. Treasury yields losing less than JGB yields.
The Chinese CPI missed both m/m and y/y. Looking at the bright side, you will see monthly improvement from 0.1% to 0.3% while y/y sunk to -0.8% from -0.3%. Yet, it does not seem to dim the hopium springing in the Chinese equity market. The Chinese equity market continue to sprout three days in a row before the Lunar New Year holiday, on hope of stimulus from the Chinese government that has been mentioning for a month yet without concrete action. The AUD/USD is well balanced at 0.6521, 0.01% higher for the session. NZD/USD is 0.05% lower while USD/CAD slipped 0.03%. Elsewhere, EUR/USD is 0.09% higher and GBP/USD is unchanged.