Europe Summary and Highlights 1 August

European morning session

EUR/USD dropped 35 pips through the European morning, dipping below 1.14 for the first time since early June. Risky currencies were generally lower, mostly underperforming the EUR with the EUR gaining a little ground against GBP, AUD and SEK. EUR/CHF was also slightly higher, reacting to the increased tariff on Switzerland announced overnight. USD/CAD also gained 20 pips to 1.3875, but USD/JPY was unchanged at 150.55.

News was fairly neutral, with final manufacturing PMIs providing no significant revisions and Eurozone CPI only marginally above consensus, with core in line with expectations, but USD and JPY gains reflected general weakness in equities, triggered by the tariff increases.

Asia session

There is no TACO for Canada and Switzerland as both got hit by 35% and 39% of tariffs respectively. Taiwan, Cambodia, Thailand, Malaysia, Vietnam, Indonesia all got around 20%. Australia got 10%, New Zealand 15%, so as Israel, Turkey and Venezuela. Transhipping tariff for Canada is 40%. So far USD/CAD has been cool as it is trading only 0.02% from Thursday's close at 1.3855 after an opening dip of ten pips. The broad risk sentiment is sour with regional equities fell more than U.S. equities. AUD/USD is trading 0.18% higher at 0.6436 and NZD/USD is trading 0.14% lower at 0.5880.

As USD/JPY jumped past 150 figure, we are beginning to hear verbal intervention, starting from Japanese FM Kato on speculative weakness in the JPY. We do not see the BoJ to actually intervene as the pace of weakness isn’t alarming yet. USD/JPY is trading 0.07% lower at 150.61. Else, EUR/USD is up 0.08% while GBP/USD down 0.03%.