Europe Summary and Highlights 10 Jul

European morning session

Norway June CPI dropped to 2.7% from 3.1% (mkt 3.2%), a steep downside surprise. Details were not published due to technical problems but the stats office says the headline has been validated. NOK the underperformer on the morning, off around ½ % vs dollar and euro. Data supports the notion that Norges Bank has been too hawkish. Oil also pretty sanguine still (- $ ½ today) also playing to the drop back.

Otherwise, market still digesting the overnight talk from Japan, while USD/JPY tending to trim back from the Asia lows to be mid bar around 161.80. Still lots to work through in terms of the mechanics of the idea, how it would work in practice and over what kind of scale and timeframe.

Asia Session

Japan FM announced that the Japanese government will seek measures encouraging GPIF and other pension funds to raise investment in Japanese financial assets. It seems to be one of the act they would prefer to stabilize JGB yields while allowing BoJ's independency. GPIF, being the largest public pension fund, could seize a more important role in the JGB market and absorb more JGB when the BoJ tapers. USD/JPY is trading 0.49% lower at 161.56 with JGB yields lower across the curve.

With weekend coming soon, market participants are cautious not to being caught wrongfooted. While broad market sentiment is hopeful for limited escalation, it is hard to give a timeline when the geopolitical tension will ease. U.S. major equity indexes are slightly in the red yet regional equities are more upbeat. AUD/USD is trading 0.2% higher at 0.6955. NZD/USD is trading 0.35% higher while USD/CAD slips 0.09% on higher oil. Else, EUR/USD is up 0.12% and GBP/USD is up 0.17%.