European Summary and Highlights 4 Apr

European morning session

Riskier currencies continued to make gains against the USD, JPY and CHF through the European morning session. AUD/USD traded up around 20 pips to above 0.66 for the first time since March 21, while EUR/USD also gained around 20 pips to 1.0860. GBP underperformed slightly, with EUR/GBP gaining 5 pips to 0.8575. USD/JPY was marginally firmer at 11.75, but the CHF was the weakest currency, with EUR/CHF gaining 40 pips to 0.9840 after weaker than expected Swiss CPI data.

Swiss CPI came in at flat on the month and 1.0% y/y in March, down from 1.2% in February and well below the 1.3% expected. Swiss 2 year yields fell a further 5bps, underpinning the CHF decline.

The only other data was Swedish services PMI, which came in stronger than expected at 53.9, its highest since November 2022. EUR/SEK traded around 2 figures lower through the morning to 11.5050.

Asia session

The antipodeans were the standout performers against the USD as the greenback traded broadly softer. The Australian service PMI continue to show the strength of Australian services sector, which has been highlighted by the RBA, a critical factor in the high inflation picture in Australia. While we do not see RBA to resume tightening, a sequence of strong service data may push back early cut expectations. Regional risk is performing individually while U.S. equity indexes are higher. AUD/USD is trading 0.37% higher at 0.6589 and NZD/USD is 0.44% higher at 0.6035 while USD/CAD slipped 0.12% to 1.3510 with oil holding near recent high.

USD/JPY continue to hover around recent high above 151 and we did not hear any verbal intervention from the Japanese officials on Thursday, which seems to suggest the BoJ would be content with stalling further weakness in the JPY, rather than strongly bringing it up for now. Both the U.S. Treasury and JGB yields are higher. USD/JPY is trading 0.03% lower at 151.64. Else, EUR/USD is up 0.1% and GBP/USD is up 0.03%.