Europe Summary and Highlights 21 October
USD/JPY was the main mover in the European morning, gaining to 151.80 in a choppy session.
European morning session
USD/JPY was the main mover in the European morning, gaining to 151.80 in a choppy session. JPY weakness overnight was extended early in the session with the confirmation of Takaichi as the new PM. However, the announcement of Katayama as the new finance minister triggered a correction of half a figure to 151.10, as she is on record as saying that USD/JPY’s fair value is in the 120-130 region. But the dip was bough, and USD/JPY finished the session at 151.80. CHF/JPY made another new all time high at 1.9120, but EUR/CHF bounced a little after an initial dip to test the November low at 0.9204.
The USD was generally firmer through the session, with gains against the EUR possibly helped by comments from ECB chief economist Lane, who warned of the potential vulnerability of the Eurozone banking system to USD funding problems. EUR/USD fell 25 pips to 1.1610. AUD/USD was also softer, falling around 10 pips to 0.6480, and GBP/USD also fell slightly a the end of the session. Earlier, UK public sector borrowing numbers for September were in line with consensus. Scandis were the best performers on the morning, gaining slightly against the USD as well as against the EUR.
Asia session
With Ishin's support, Takaichi will become the latest PM for Japan and will begin naming her cabinet on Tuesday. The vote is ongoing but there seems to be little surprise. As a fiscal dove, her naming will be closely watched to see if she remain committed to "Abenomics". USD/JPY has risen to 0.22% at 151.06, challenging the Monday high.
Regional sentiment is better than U.S. major equity indexes. Chinese and Hong Kong equities are gaining more than a percent with Japanese equities follow and U.S. major equity indexes in the red. Trump is again posing another tariff threat on China but the market is generally waiting for his TACO comments. AUD/USD is trading 0.17% lower at 0.6502, NZD/USD is trading 0.25% lower at 0.5729 while USD/CAD rises 0.08%. Else, EUR/USD is down 0.05% and GBP/USD is down 0.1%.