Europe Summary and Highlights 29 July
Still waiting on an unusually uncertain Fed meeting, with large hedging over unchanged
AUD/USD remains lower, below 0.6950, after CPI; regional tech still weighed
Europe
A further morning of largely waiting out the FOMC. There is unusual uncertainty into the latter (very unusual to have 30% hike odds rather than nearer zero or 100% - partly reflecting lack of guidance and partly reflecting division and uncertainty). This leaves the market waiting for what could be two-way reaction. EUR/USD is back to sitting just off 1.14.
Brent front month sits up around $3, breaking the recent downtrend on concerns over US-Saudi strikes on Iran-backed groups in Iraq, while Iran also rejects Oman’s proposals for regional management of the Strait.
Tech stocks remain weighed (Kospi had another bad session, Nikkei still underperforming), very marginally leaning on USD/JPY into month end, though reluctantly (-02%).
AUD/USD around day lows following the Asia move, and has nudged back below 0.6950, dragged both by the regional tone but also with CPI coming in a little below expectations.
Asia Session
The Australian inflation picture is showing further moderation with June monthly at 3.8% y/y, Q2 at 4%. The all important trimmed mean CPI arrived at 3.6%. It seems to suggest the inflationary pressure from energy was indeed fading, before the revival in July. AUD/USD is trading 0.34% lower at 0.6950. NZD/USD is trading 0.07% higher while USD/CAD slips 0.04% on higher oil. Axios report that Iran launched ballistic missiles towards a US base in Jordan and was swiftly confirmed by U.S. military, framing it as an attempted surprise attack from IRGC.
Regional focus remains on Korea. After a 10% stop on KOSPI for Tuesday, the Wednesday situation is no better until the national team verbally step in. USD/JPY received some haven bids to trade 0.19% lower while EUR/USD and GBP/USD are up 0.09%.