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EURJPY Dives 1.6% On Weak PMIs/Global Growth Concerns

FOREX
  • The Euro sustained early pressure on Thursday following a very disappointing set of Eurozone preliminary PMI data. With German and French services and manufacturing sectors growing far slower than forecast, EURUSD feel just shy of 100 pip to print a low of 1.0483 ahead of NY trade.
  • Amid growing US recession fears USDJPY had also underperformed throughout early trade on Wednesday, but the weakness extended in the lead up to a dismal set of US PMI numbers that included a 23-month low for Manufacturing and 5-month low for Services.
  • While the data had no lasting impact on the greenback, the underlying risk-off tone continued to dampen the EURJPY exchange rate, down 1.6% for the session.
  • The pair has been maintaining a bullish technical outlook of late, however, the sharp pullback during today’s session indicates the pair’s ongoing short-term sensitivity to bouts of poorer global sentiment. The move down has narrowed the gap with initial firm support residing at 140.62, the 20-day EMA. In similar vein, AUDJPY has maintained a downward trajectory and has had an even larger adjustment of -1.70%
  • Elsewhere, the Norwegian central bank rate decision delivered mixed messages: the bank raised rates by 50bps - a larger hike than forecast - but indicated this more sizeable pace of tightening would not be maintained further out the curve, with just 25bps likely to follow in August. As a result, the NOK trades close to unchanged against the Euro, despite initial supportive price action.
  • Looking ahead to tomorrow, markets will get Japanese core CPI data and it is worth noting New Zealand are out for a local holiday. In Europe, UK retail sales for May will be published shortly before German IFO data. University of Michigan sentiment data headlines the US docket.
  • RBA Governor Lowe is due to participate in a panel discussion at an online event hosted by the Union Bank of Switzerland as well as potential comments from Fed’s Bullard and BOE’s Pill and Haskel.

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