European Summary and Highlights 06 May
USD/JPY remains in focus in holiday thinned European trade.
Europe
USD/JPY push higher ran out of steam in Europe. Views are mixed with some wanting to test the upside and feeling the BOJ intervention risk is low until 156/57. Others feel that USDJPY is seeing a technical correction and likely to test 152 in the coming days/weeks.
EUR/USD is little changed in early Europe. However, the softer than expected U.S. employment report has seen money markets moving towards discounting two rate cuts from the Fed in 2024. In turn this provides a little more EUR protection, given the ECB is likely to start easing in June.
Elsewhere, the AUD remained firm, with sentiment improving towards China markets. The sense is that China markets are oversold and the China/HK equity markets have recently attracted some fund managers rotating out of Japan.
Asia
USD/JPY went up another figure on Monday, another Japanese holiday. But given the current dynamics after two BoJ intervention, unless we see another robust rally in USD/JPY, we would only likely to see another intervention if the BoJ really want to beat down USD/JPY to below 150. Right now, short term speculators will not be very comfortable holding long positions and should keep a lid on the pair. USD/JPY is trading 0.7% higher at 153.99.
The Chinese Caixin PMI both stayed in expansion for service (52.5) and composite (52.8). The reopening of Chinese equity markets also see a vibrant start for the week. This helped the Aussie to overcome the USD strength dragged by USD/JPY. AUD/USD is trading 0.04% higher at 0.6611 while NZD/USD slipped 0.22% to 0.5996 and USD/CAD rose 0.02%. Else, EUR/USD is up 0.05% and GBP/USD is down 0.02%.