Europe Summary and Highlights 19 November
JPY and CHF strength were the main features of European morning trading, as risk sentiment suffered following Putin’s statement updating the Russian nuclear doctrine.
European morning session
JPY and CHF strength were the main features of European morning trading, as risk sentiment suffered following Putin’s statement updating the Russian nuclear doctrine. Putin said Russia could consider using nuclear weapons if it was subject to a conventional missile assault supported by a nuclear power, after the United States allowed Ukraine to fire American-made long-range missiles deep into Russia. USD/JPY fell a big figure, finishing the morning at 153.70, while EUR/CHF lost 40 pips to 0.9320. The USD was generally firmer elsewhere, with EUR/USD dropping around 20 pips to 1.0560, and the EUR generally making small gains on the crosses against other European currencies (except this CHF). AUD moved with the EUR, while USD/CAD was little changed.
Otherwise, the main news was the BoE testimony to the Treasury select committee, which produced a range of views. Broadly speaking, members Mann and Lombardelli were on the hawkish side, expressing concern about the impact of the minimum wage on inflation, while Taylor and governor Bailey were more neutral, emphasising the uncertainty on how businesses would react to rising employment costs. EUR/GBP was marginally firmer, but likely because of the generally more risk negative market tone rather than the MPC comments.
Datawise, there were larger than expected surpluses for the Eurozone current account and the Swiss trade balance in September and October respectively, while the Eurozone CPI for October was unrevised at 0.3% m/m, 0.2% core.
Asia session
On Tuesday's Asia session, there seems to be some JPY buying interest with little fresh impetus, except the usual jawboning from finance minister Kato, which came after most of the JPY gains. The pair dropped from 154.65 to 154.03 in the first few hours all Asia market came online. Both the U.S. Treasury and JGB Yields are lower while equity is performing individually. USD/JPY is currently trading 0.33% lower at 154.14.
Major FX is having a slow start except for the JPY. Most equities indexes are quite upbeat except for the Chinese equities toes in the red.
AUD/USD is trading 0.16% higher at 0.6519, NZD/USD is 0.1% higher at 0.5898 while USD/CAD is unchanged. Else, EUR/USD is unchanged and GBP/USD is up 0.05%.