EUR/USD traded relatively flat before USD resurgence after ADP release

EUR/USD

The pair traded relatively flat throughout the session before a resurgence in the USD following the ADP release. Despite the headline ADP figure coming in slightly lower than expected, there was a significant upward revision to the previous figure which sent the pair to trade at session lows. Today was a particularly light one on the data front from the Eurozone, however the earlier stages of the session did see the release of ECB source comments. The comments said there is no clear consensus at present on policy action and there is an intense debate seen on Thursday after March HICP data. Following this, the pair did see a modest move to the upside but ultimately risk-off sentiment ahead of tomorrow’s eagerly awaited ECB release proved to over-ride these gains and consequently led the pair lower with the move to the downside exacerbated by the aforementioned post-ADP USD strength. Looking ahead, as can be expected, all eyes remain upon the actions of Mr Draghi and his board with 2 out of the 57 surveyed analysts calling for a cut in the main refi rate to 15 bps, 1 is calling for a cut to 10bps and the other 54 are expecting rates to stay on hold at 25bps. 

GBP/USD

Today marked another relatively muted session in terms of newsflow out of the UK with the Construction PMI release providing the pair with little in the way of a reaction despite coming in slightly below expectations. One source of direction for the pair coming from sources reporting corporate names selling in EUR/GBP as EUR saw broad-based weakness across the session following the already mentioned decision by participants to take risk off the table ahead of tomorrow’s ECB decision. From a technical perspective, losses in EUR/GBP were exacerbated by the pair making a failed attempt to break the 100DMA seen at 0.8308 to the upside. Looking ahead, as previously mentioned events in the UK are likely to be overshadowed by the string of upcoming risk events out of the Eurozone and US. 

USD/JPY

The pair traded in a relatively indecisive manner today with a weaker JPY during Asia-Pacific trade seeing the pair move to the upside, with these gains later being pared amid a resurgence in JPY. Overnight trade saw JPY weakness stemming from reports Japan's state-run GPIF (the world's largest pension fund, with assets under management of over USD 1.23trl) will begin investing in funds specializing in Japanese stocks with high returns. Additionally, BoJ's Tankan inflation survey showed Japanese companies see 1.5% inflation in 1 year and see 1.7% inflation in 3 years time, which saw JPY weaken to its lowest level since late January as the report forecasts inflation missing the BoJ’s 2% target and led to speculation of further possible easing measures. However, JPY did claw back some territory alongside the weakness in EUR which led EUR/JPY lower.