Europe Summary and Highlights 31 January

European morning session

EUR/USD slipped lower through the European morning, reacting negatively to more weak Eurozone data. After opening near 1.04 it slipped to a low of 1.0365 after the French national and German state preliminary CPI data came in weaker than expected, pulling 2 year EUR yields down by 6bps. Earlier, German retail sales data was also weaker than expected at -1.6% m/m, helping set the more negative tone.  

USD/JPY was fairly steady, but GBP and the CHF edged lower with the EUR, although EUR/GBP and EUR/CHF were also down on the session. Scandis were steady against the EUR, but the AUD and CAD both weakened, broadly matching EUR weakness, although the CAD was firmer earlier in the session.

Asia session

On Friday's Asia session, we are seeing the USD/JPY to fast approach weekly low at 153.7 but reversing traction as session progress. Expectation of another BoJ hike seems to be in play after a strong Tokyo CPI. The headline January CPI came in at 3.4% while both ex fresh food, ex fresh food & energy are both 2.5%. It points toward transitory factors contributing to the headline figure and underlying CPI should not be dismissed  USD/JPY is up 0.15% at 154.15.

The risk sentiment continues to recover on the last day of the week. Tariff man is pushing the tariff on Mexico and Canada on Saturday but has not decided whether it implies on oil too, which seems to be giving the market a glimpse of hope. major equity indexes are all in the green. AUD/USD is up 0.29% to 0.6218, NZD/USD is up 0.21% while USD/CAD slides 0.13% on more upbeat oil. Else, EUR/USD is unchanged and GBP/USD is up 0.05%.