North American Summary and Highlights 27 Mar
Overview - USD/JPY fell on comments from Kanda refusing to rule out intervention while lower Bund yields weighed on the EUR.
North American session
Early trade saw EUR/USD falling to a low of 1.0811 from 1.0835 in response to falling bund yields with a subsequent partial correction to 1.0825. GBP/USD in contrast fully a dip to 1.2606 from around 1.2635. USD/JPY found support near 151 before recovering to around 151.35. UST yields slipped, though less so than those of Bunds. The USD saw modest losses versus AUD and CAD.
There was no significant US data though eyes were on a speech from Fed’s Waller due after the close.
European morning session
USD/JPY fell back 70 pips in the European morning helped by comments from Kanda who didn’t rule out intervention to respond to JPY weakness. However, he said that the 4% move in the span of 2-weeks was not considered a mild move, and said the BoJ would respond with monetary policy if FX market moves affect the economy. Although this was no more aggressive than the recent comments from Finance Minister Suzuki, USD/JPY responded by dropping 70 pips to 151.10 from 151.80, having made 34 year highs at 151.97 overnight.
Otherwise the main news was the Swedish Riksbank meeting, which sharply revised down the projected rate path from the November meeting. However, this was already essentially priced in by the money market, so the impact on the SEK was modest. The Monetary Policy Report indicated a rate cut was likely in May but all but certain in June. EUR/SEK only gained around 2 figures on the news, after initially trading up around 5 figures.
The only other FX move of note was the further gain in EUR/CHF, which rise around 20 pips to 0.9810, its highest since June last year. The European Commission survey was broadly as expected, with the business climate index and the business and consumer survey indices slightly higher.