Europe Summary and Highlights 9 January
Most of the FX action was in GBP, which weakened at the open, with EUR/GBP rising to 0.84 from 0.8375 in the opening hour, at the same time as we saw a further general rise in UK yields.
European morning session
Most of the FX action was in GBP, which weakened at the open, with EUR/GBP rising to 0.84 from 0.8375 in the opening hour, at the same time as we saw a further general rise in UK yields. This came once again without any significant news, suggesting some foreign selling of gilts. UK yields edged back lower and GBP edged higher in the rest of the session, but only partially corrected the early move.
USD/JPY edged a little lower, dropping back to 158.00 from an open around 158.15, but EUR/USD was little changed near 1.03. German industrial production data was stronger than expected in November, rising 1.5% m/m, offsetting the weaker impression from Monday’s orders and sales data, while the German trade surplus was larger than expected at EUR19.7bn due to a decline in imports, but none of this data had a noticeable FX impact. The scandis were both slightly firmer against the EUR. While EUR/CHF edged up a tad.
Asia session
The November Japan Labor Cash Earning came in strong at 3% y/y, beating estimates and improved from 2.2% in October. It will be supportive for the JPY if BoJ follow through with their tightening. However, the lack of commitment from BoJ will see JPY gains capped. USD/JPY is trading 0.16% lower at 158.08 with U.S. Treasury yields lower and JGB yields erased all opening gains.
The risk sentiment is broadly soft on Thursday. Only the HSI is surviving with being close to unchanged. With USD mostly higher, except against JPY, the Aussie is falling so far in the Asia session. AUD/USD is down 0.26% to test the 0.6200 figure, NZD/USD is down 0.26% to 0.5598 while USD/CAD rose 0.02% as oil slips. Else, EUR/USD is down 0.06% and GBP/USD is down 0.15%.