Europe Summary and Highlights 12 December
Riskier currencies were generally a little lower through the European morning session.
European morning session
Riskier currencies were generally a little lower through the European morning session. EUR/USD dropped around 20 pips to trade back below 1.05, while AUD/USD gave up 15 pips to trade back at 0.6405 after overnight gains.
EUR/CHF initially moved sharply higher on the SNB decision to cut rates 50bps, reaching a high of 0.9345 after opening at 0.9280, but fell back to 0.9308 by the end of the session. The market had seen a 50bp cut as a 65% chance ahead of the decision, although the majority of forecasters were looking for a 25bp move. The SNB was less explicit this time around about further cuts, save to repeat its long-standing mantra that it ‘will adjust its monetary policy if necessary to ensure inflation remains within the range consistent with price stability over the medium term’, although it did also emphasise it as ready to intervene in the FX market if necessary.
Asia session
USD/JPY has paused the recent rally on Thursday's Asia session with both the U.S. Treasury and JGB yields are higher. As we are getting closer to the 50% retracement of the recent correction in USD/JPY, market participants seems to be cautious in placing more longs with the possibility of a BoJ hike in a week. USD/JPY is trading 0.11% lower at 152.28.
We have another solid labor report from Australia on Thursday. The headline unemployment rate fell to 3.9% from 4.2% and headline job growth is robust at 35.6k with a large chunk of it come from full time employment. It is a report RBA would be happy to see as they are pushing back early cut. AUD/USD is trading 0.74% higher at 0.6416, NZD/USD is trading 0.39% higher at 0.5807 while USD/CAD is 0.08%. Else, EUR/USD is up 0.11% and GBP/USD is up 0.13%.