European Summary and Highlights 02 May
The USD moved slightly higher against the EUR, GBP and scandis, but fell back against the JPY and CHF and was little changed against the CAD and AUD in the European morning.
European morning session
The USD moved slightly higher against the EUR, GBP and scandis, but fell back against the JPY and CHF and was little changed against the CAD and AUD in the European morning. EUR/USD lost around 20 pips to 1.07, and GBP/USD moved in line, although GBP did see some weakness earlier in the session after the OECD lowered their UK growth forecast while raising their forecast for global growth. This triggered a EUR/GBP move from 0.8550 to 0.8560, but this was reversed by the end of the morning.
The CHF and JPY were the strongest currencies, with the CHF benefitting from higher than expected Swiss CPI for March, which showed a rise to 1.4% y/y against the market consensus of 1.1%. EUR/CHF fell sharply from 0.9820 to 0.9760 in response. USD/JPY fell from 155.80 to 155.25 without an obvious trigger, although the BoJ intervention in NZ time overnight may have triggered some further unwinding of short JPY positions after Europe returned from the May Day holiday.
The NOK was the weakest currency through the morning, with EUR/NOK rising 4 figures to 11.86 with no obvious trigger, although the weaker oil price in the last couple of days may be a factor.
Asia session
There is another suspected round of intervention from the BoJ in Asia time when only the NZ market was open. USD/JPY dropped close to five figures again to 153 and we so far did not see another round of intervention even when USD/JPY has rebounded to 156 figure. Some market chatter suggest BoJ is showing weakness as they looking for maximum pain for speculators with minimum USD reserve spent. From my perspective, if it is an actual intervention, BoJ is showing commitment and sending a strong signal they are against speculative shorts in JPY and are willing to inflict maximum pain, unlike the last intervention in 2022 and the soft rhetoric from Japanese cabinet officials last week. USD/JPY is trading 0.93% higher at 156.05 with session high at 156.29. Despite there has yet been a fundamental shift, nothing changes sentiment more than price. If the BoJ is committed to fight speculative shorts and keep hitting the intervention button, we may see a turn in the USD/JPY while the Fed is not delivering anything more hawkish.
The April Australian trade balance came in weaker than expected with exports m/m barely in positive territory of 0.1% and import slipped to 4.2% from 4.5%. However,the improving sentiment is in the driver's seat for the AUD/USD. Major equity indexes have resumed or rebounded the post FOMC drop with the HSI gaining more than 2%. Chinese market remain closed. AUD/USD is trading 0.25% higher at 0.6539, NZD/USD is up 0.04% while USD/CAD slipped 0.13% as oil recovered almost half a dollar. Else, EUR/USD is up 0.03% and GBP/USD is up 0.05%.