Europe Summary and Highlights 18 Aug
Little traction outside of modest NZD pullback
Risk tone tempered by US-Iran escalating standoff
UK labour data helps keep BoE paused in wait and see mode
Europe
Not a lot of traction, as the modest dollar bounce overnight flattens out in the European morning. One slight exception is NZD, where the initial false break and pullback from 0.59/10 dragged, although that intraday correction also pares..
Risk markets nonetheless checked by the realities of the entrenching US-Iran standoff, with S&P future –½ % and Nasdaq almost -1%. Brent front month holds around $91, more interest in the wider complex.
UK labor market data has private sector ex-bonus pay easing to 2.8%, lowest since Oct20, while unemployment held 4.9% (mkt 4.8%). Vacancies at five-year lows. HMRC payrolls data also showed a 13k drop in July.
ZEW survey still improves from lows, Aug EZ expectations to 31.4 from 23.4, German current conditions -61.1 from -77.6.
Asia Session
Broader risk sentiment turns sour as the Asia session progress. Major equity indexes are mostly in the red on renewed concern in the Strait of Hormuz as another vessel is reported being hit. AUD/USD is trading 0.1% lower, NZD/USD is trading 0.38% lower while USD/CAD rises 0.02%.
USD is trading broadly higher on risk turning sour. Sentiment remains heavy on a lack of swift resolve in Middle East. Trump even mentioned bombing Oman, definitely not a good sign. USD/JPY is trading 0.17% higher at 159.70 with long end JGB yields outperforming short end. Else, EUR/USD and GBP/USD are down 0.06%.