Europe Summary and Highlights 9 December
There was little net change in most FX rates in the European morning.
European morning session
There was little net change in most FX rates in the European morning. Initially the USD fell back against European currencies and extended overnight gains against the JPY, but these moves were reversed by the end of the morning. Comments from BOJ governor Ueda triggered some of the JPY volatility. He noted that the rise in long term JPY rates was “somewhat rapid” and indicated the BoJ may intervene to prevent more gains, which helped early JPY weakness. However, he also supported market expectations of a December hike by noting a tightening labour market and the low level of real rates, and helped the JPY recover by mentioning the significance of FX movements.
The scandis were the best performer son the morning, with EUR/SEK down 4 figures and EUR/NOK down 3 figures, although without an obvious trigger.
Asia session
The RBA has kept rate unchanged at 3.6% in the December meeting and does not seem to be signaling a cut in the February 2026 meeting either as they suggest risk to inflation is tilted to the upside. While this indicates we will not be seeing the last cut as per forecast in the coming few months, it is not the hawkish tilt certain market participants are anticipating. Such see the AUD/USD dipped on release before gradually recouping losses to trade 0.3% higher at 0.6644 as governor Bullock is more hawkish in her press conference suggesting a possible February hike if Q4 inflation jumps further. NZD/USD also dragged 0.19% higher while USD/CAD slips 0.07%.
On Tuesday, we are hearing Trump threatens Mexico tariffs due water treaty violations. It looks like the tariff man is back to action but so far the magnitude are not market moving yet, escalation of such is the one to watch out in the coming week. USD/JPY is trading 0.05% higher at 155.99. Else, EUR/USD and GBP/USD is up 0.09%.