European Summary and Highlights 24 Jan

European morning session

The USD fell back through the European morning session, with GBP the best performer after UK PMIs came in on the strong side of consensus. UK composite PMI rose to 52.5, its highest since July. GBP/USD gained around half a figure and settled above 1.2750, while EUR/GBP fell 10 pips to 0.8540. EUR/USD also gained around 30 pips to trade above 1.09, despite some early softness after French and German PMIs disappointed. But despite the weakness in French and German PMI, Eurozone PMI showed a rise on the month and was only marginally below consensus. The USD also suffered from general gains in equities. The USD even lost ground against the JPY, with USD/JPY down around 40 pips to 147.50. Other currencies moved in line with the EUR.

Asia session

The Japan December Trade data came in stronger than expected. December Exports increased by 9.8% y/y vs expected +9.1% and imports declined by 6.8% y/y vs expected -5.3% while Trade Balance is positive 62.1bn yen vs expectation of -122.1bn. The report shows very strong export to the U.S. and a pick up in Chinese demand, which are good news for the Japanese economy. Else, JGBs yields jumped on rate hike expectation. With U.S. Treasury Yields falling, USD/JPY is trading 0.24% lower at 147.92. 

The NZ Q4 CPI is banging in estimate at 0.5% q/q and 4.7% y/y. With the RBNZ OCR forecasting only half a 25bps hike in last revision of OCR path, this CPI data is not supportive for the RBNZ to turn that into a complete hike. With positive regional risk sentiment, NZD/USD is trading 0.02% higher at 0.6104 and AUD/USD slipped 5 pips to 0.6574 while USD/CAD rose 0.06% to 1.3468. Else, EUR/USD is 0.09% higher and GBP/USD is 0.11% higher.