Europe Summary and Highlights 20 March
The USD was generally stronger in a more risk negative market in Europe.
European morning session
The USD was generally stronger in a more risk negative market in Europe. EUR/USD lost half a figure to 1.0845, and AUD/USD also lost half a figure to 0.6288. Most European currencies moved with the EUR, but GBP gained a little ground with EUR/GBP falling 10 pips to 0.8375 following the UK labour market data. This was mixed, with some evidence of weakening wage growth in the latest HMRC data, but employment data on the strong side of expectations.
Otherwise, the SNB cut their policy rate by 25bps to 0.25% as most had expected. This triggered EUR/CHF gains of around 40 pips to a high of 0.9580, settling back to 0.9570. Some of the gains reversed earlier losses, so EUR/CHF was only up around 20 pips on the session.
The Riksbank left rates unchanged as expected. EUR/SEK rose 3 figures on the session to 11.04, probably more due to the risk negative tone than the Riksbank decision.
USD/JPY was also slightly higher on the session, gaining 20 pips to 148.60, but the JPY ground on the crosses.
Asia session
As Asia market participants digest the result of FOMC meeting, we are hearing from Trump that he thinks the Fed should cut rates as tariffs hit the economy. His take will increase policy uncertainty but also seems to be supportive for the U.S. equity market, at least for now. USD/JPY is trading 0.21% lower at 148.36.
Regional sentiment is performing worse than the U.S. equity. The Australia Feb headline Employment Change has missed estimate at -52.8K with employment unchanged but participation rate slumped. However, given the history of solid Australian labor market, one bad report does not guarantee the downfall of the labor market and will need further confirmation in the coming months. AUD/USD is down 0.28% to 0.6338. The New Zealand Q4 GDP is 0.7% y/y, returned to growth after two quarters of contraction by remains -1.1% y/y. NZD/USD is down 0.46% as it does not derail RBNZ's easing path while USD/CAD rose 0.05%. Else, EUR/USD is down 0.05% and GBP/USD is down 0.07%.