European Summary and Highlights 10 Apr

European morning session

European currencies gained a little ground through the European morning session, with GBP and SEK marginally the best performers. EUR/USD edged up around 10 pips, but GBP/USD gained 20 pips to 1.2695. USD/JPY was also slightly firmer, rising 10 pips to 151.85.

Newswise, Norwegian CPI was the only significant data, showing a larger than expected decline in the core y/y rate to 4.5% in March from 4.9% in February. EUR/NOK initially blippd a couple of figure higher, but finished the session little changed at 11.58.

Asia session

RBNZ kept rates unchanged at 5.5% but suggest OCR to stay restrictive for a sustained period of time. The statement is balanced as they reviewed both the upside and downside of inflation outlook. They seems to be preparing market participants of a spike in Q1 CPI from preliminary data they have reviewed and suggest such to be transitory. The key takeaway from the April meeting would be the cut by year end 2024 shown in the February OCR forecast may not materialize unless inflation is back to target range by that time. Market is reading this as "higher for longer" and see NZD/USD 0.17% higher at 0.6070, while AUD/USD dipped 0.09% to 0.6622 and USD/CAD slipped 0.04% on steady oil.

We hear more from Ueda on Wednesday but mostly on a recorder, except he is saying that BoJ won't change monetary policy just to deal directly with FX moves unless "fx moves lead not just to rising import prices, but risk pushing up trend inflation more than expected". He also suggest the BoJ will reduce JGB buying after observing market's digestion of March's policy shift. All this sound to be supportive for the JPY at least in the medium run but USD/JPY is 0.04% stubbornly higher at 151.78 with JGB yields outperforming U.S. Treasury Yields. Else, EUR/USD is down 0.06% and GBP/USD is unchanged.