Europe Summary and Highlights 3 Sep
JPY still seeing short covering momentum
CHF tempered by higher CPI after getting oversold, though still the low inflation, low rates counter
Europe
USD/JPY long liquidation gathers further steam with the pair back to just short of 156.
30yr JGBs come off around 10bp into and out of a solid auction. Market taking note of BoJ rates shift and potential for real money local demand if bond stabilise at these more attractive levels. These the broad considerations hitting a market caught long into the initial exporter and spec covering supply earlier in the week.
Swiss CPI comes in firmer than expected at 0.8%y/y from 0.4% vs market of 0.5%, stemming the recent tide on the CHF on the day, if still substantially lagging the yen (so net still rotation). EUR/CHF had got overbought on the push to the 0.9455 Fib and back at 0.9390~ now. USD/CHF pulls back from the 0.8150 resistance hold of yesterday, off around ½ % to 0.8090 today.
EUR/USD remains close to the 1.16~ figure that continues to hold sway with options expiries stacked on and around the figure all week into payrolls.
Asia Session
The stars are lining up for JPY as market participants are front running the BoJ September hike. Apart from rate hike speculation, the potential calming in Middle East is also driving the haven USD bids away. USD/JPY is trading 0.70% lower at 157.57 with JGB yields lower across the curve.
CNN reported that U.S. military escorts 40 tankers with 18 million barrels through Hormuz on Tuesday. Compared to roughly 20million barrels per day pre-war, it is a close one to effectively smooth traffic in the Strait. However, it is unlikely commercial vessels will return to pre-war activities as U.S. escort does not guarantee no accident and such escort may not be sustainable. Major equity indexes are performing individually with oil lower while precious metal cheer. AUD/USD is trading 0.14% lower at 0.7160. NZD/USD is trading 0.1% higher while USD/CAD slips 0.08%. Else, EUR/USD is up 0.1% and GBP/USD is up 0.06%.