EUR/USD
After recovering overnight some of the significant losses sustained yesterday the pair fell back below the 1.2600 handle, and subsequently traded around this level for much of the session, as German final manufacturing PMI was revised below 50.0, showing the first monthly contraction in 15 months. Since then the pair traded range bound until a host of weak US data caused a sharp spike higher for the pair, but this was quickly retraced as sentiment remained bearish ahead of the ECB rate decision tomorrow, where Draghi is expected to unveil the full details of the central bank’s much awaited ABS purchase program.
AUD/USD
Overnight AUD sharply fell against all of its peers as Australian retail sales printed a 4-month low (+0.1% vs. Exp. +0.4%). Consequently AUD/USD tumbled lower to trade just 6 pips off the technical support seen at pair’s YTD low of 0.8660, which if broken would have seen the pair trade at July 2010 lows. This weakness in AUD supported early USD-index strength, with AUD/USD said to be sold by Asian based banks and retail accounts overnight. As the European session progressed the pair moved to retrace some of its losses, yet remained in negative territory heading into the European close. Looking ahead Australian trade balance and building approvals will draw participant focus.
USD/JPY
USD/JPY broke through the 110.00 handle to the upside overnight, the first time since mid-2008, reaching a high of 110.09, with this level attained following a run on stops after the break above yesterday's high at 109.85. The initial momentum stemmed from USD-index strength, yet the move failed to be consolidated as profit-taking quickly brought the pair to back around 109.75. As the US came to market the pair continued to weaken alongside the USD-index as falling yields make the greenback less attractive and thus broke below earlier session lows. Looking ahead for the pair, the Japanese monetary base data overnight will draw attention, and the host of US data points tomorrow, notably ISM New York and factory orders.
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