European Summary and Highlights 7 August

European morning session

The risk recovery extended through the European morning, with USD/JPY up around 60 pips to 147.60, and EUR/CHF also up 60 pips to 0.9420. There was substantial strength in the scandis, with both EUR/NOK and EUR/SEK dropping around 1%. AUD/USD gained around 30 pips to 0.6565, while EUR/USD and GBP/USD were little changed.

There was minimal news, with somewhat stronger than expected German and Norwegian industrial production and a slightly smaller than expected French trade deficit, but nothing market moving.

Asia session

The latest volatility in the Japanese equity space and JPY seems to have brought out the ultimate verbal intervention from BoJ. Uchida says won't raise rates if market unstable. While it does not mean a shift in policy stance, it is good enough to reassure market participants. USD/JPY shot higher to 147.71 up 2.38% for the day as JGB yields drop while U.S. Treasury yields continue to recover across the curve. 

Nikkei continue to recover and has already recovered Monday's loss, so as TOPIX. Risk sentiment is broadly positive with U.S. three major equity indexes up more than a percent, regional equities are also in the green and seems to be boosting the Antipodeans. The Q2 employment data has come in hotter for NZ. The Q2 unemployment rate is 4.6% vs. 4.7% expected with participation rate also rose to 71.7% from 71.3%. Wage increased faster than expected on y/y and outperforms on q/q. It pushes back market expectations of a early cut from the RBNZ in the coming meeting and supported the Kiwi. NZD/USD is trading 0.97% higher at 0.6011, AUD/USD also 0.55% higher at 0.6553 while USD/CAD slipped 0.09% with oil up near half a dollar. Else, EUR/USD is down 0.14% and GBP/USD up 0.14%.