European Summary and Highlights 16 May

European morning session

The USD was generally firmer through the European morning, with EUR/USD losing around 15 pips to 1.0870 but USD/JPY seeing the biggest move, rising around 80 pips to 154.65. Other currencies moved broadly in line with the EUR.

There was little news, with the only significant data being the Norwegian Q1 GDP data, which showed the expected 0.2% gains. EUR/NOK and EUR/SEK were both marginally higher.

Asia session

The annualized preliminary Q1 GDP has come deep in contraction for Japan at -2%, 0.5% q/q. The details are also disappointing with CAPEX, export, domestic and external demand all showing contraction. But it is a preliminary report and when we had the previous preliminary GDP report the initial contraction was revised to expansion. Thus, market seems to have overlooked this weak GDP data and let USD take the driving seat. USD/JPY is trading 0.65% lower at 153.87 with JGB and U.S. Treasury Yields both lower. 

The April Australian Jobs report is mixed with a good headline employment change and higher participation but also higher unemployment rate. As per our forecast, the Australian labor market will gradually correct but remain solid. The headline shine is undermined by the fact that the gains were in part time employment where we see a drop in full time. Chinese President Xi met with Putin and says China will always be a good friend and partner of mutual trust with Russia is not a sign that China-U.S. relationship heading better soon. Regional sentiment outpace U.S. major equities in gains but AUD/USD stay depressed after jobs report to trade 0.1% lower at 0.6686, NZD/USD rose 0.02% while USD/CAD rose 0.05%. Else, EUR/USD and GBP/USD are unchanged.