Europe Summary and Highlights 22 Apr

European morning session

The USD edged a little higher against the EUR, GBP and JPY through the European morning, but was not much changed against the commodity currencies, scandis or CHF. The USD benefited from slightly higher yields, with the JPY under pressure from risk positive sentiment. USD/JPY tested the 34 year high of 154.79 seen last week, but held a pip below it.

The CHF managed to outperform the JPY helped by the news that the SNB had increased minimum reserve requirements for banks. Although the SNB said that this didn’t affect the current monetary policy stance, and looks to have been a macroprudential move, such actions are normally seen as a tightening, and helped prevent the CHF from falling with the EUR and JPY.

Asia Session

Risk sentiment is broadly positive on Monday with the lack of geopolitical escalation. Major equity indexes opened in the green with the exception of CSI as better than expected Chinese data recently diminish hopes of further stimulus. The antipodeans are supported by the waves of positive sentiment and outperformed the USD and peers on Monday. AUD/USD is trading 0.33% higher at 0.6438, NZD/USD fared better at 0.5914, 0.44% higher while USD/CAD slipped 0.15% to 1.3725.

As haven bids fade, USD/JPY resume its uptrend and is testing recent high at 154.78 again. It is quiet from the Japan side today as we did not hear any verbal intervention even if they means little. The lack of strength in past rhetoric has been the key reason for market not believing such words carries enough weight to stall JPY weakness. Still, there is no doubt BoJ will intervene when the pace of weakness accelerates. However, U.S. Treasury Yields remain much higher than JGB yields even when both increase for the day and see USD/JPY 0.06% higher at 154.69. Else, EUR/USD is 0.14% higher and GBP/USD up 0.15%.