European FX Close - Uneven growth in EZ

USD/YEN briefly reclaimed the 155 handle in early trade as specs cited the fact that (just) 14 of 48 economists in a Bbg poll predict the BOJ will raise its rate from the current range of 0 to 0.1%, though almost no one is ruling out the risk of such a move. Regarding QT, the Bank will outline plans to reduce monthly bond buying over a one- to two-year horizon.

USD gains were aided elsewhere after the first couple of major US data updates of this busy week proved encouraging, with JOLTS job openings and the Conference Board's Consumer Confidence print both beating consensus forecasts.

JOLTS came in at 8184k in June vs the 8000k estimate and that was accompanied by an upward revision to 8230k from 8184k to the May print.

Consumer confidence rose to 100.3 in July, above the 99.7 expected. However, the June print was revised down to 97.8 from 100.4.

In Europe, economic growth for the EZ surprised with a positive figure of 0.3% in Q2 vs the 0.2% estimate, but growth was unevenly distributed: While France (0.3%) and Italy (0.2%) grew moderately and Spain again recorded a particularly high growth rate (0.8%), Germany's GDP fell slightly by 0.1% vs the 0.1% gain expected.

German inflation accelerated in July, with CPI up 2.6% y/y from 2.5% the previous month and vs a stable 2.5% read forecast. A separate report, however, showed Spanish inflation slowing more than predicted. Readings for France, Italy and the euro area are due on Wednesday, with forecasting centered on a stable reading of 2.5% for the region.

EZ Economic Confidence came in better at 95.8 vs the 95.2 forecast (though down a touch from 95.9 in June).

Speakers were sparse, with just VUJCIC who noted that the ECB is "now waiting for September when we will have much more data...Then we will have new projections and make a decision on interest rates." Vujcic added that rates will either stay at the same level or go down.

Swedish manufacturing confidence fell to 97.0 from 99.2 but that for the consumer rose to 96.6 from a revised up 93.7. The overall Economic Tendency survey dipped to 95.0 from a revised up 96.4.

In the UK, junior doctors agreed to a salary rise of up to 24.6% over two years; a PwC survey found UK consumer sentiment reached its highest level in three years in July and Zoopla said the property market is showing signs of a rebound.

JPMorgan announced that it estimates that around 40% of the G10 carry trade build up has been unwound in recent weeks according to their analysis of CFTC and DTCC option data. Looking back at G10 FX carry trade unwinds since the GFC, this current episode ranks as a relatively minor ruction, according to JPMorgan strategists. They believe that the unwinding of Yen shorts could have further to run.

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