EUR/USD
Today was a particularly light start to the week for the pair with little fundamental news flow to drive price action. The main focal point from the Eurozone today was the CPI Estimate figure, although the release came in line with expectations (0.5%) and thus failed to provide the pair with any direction. Today’s Eurozone private sector loans data revealed a fall of 2% for the month of May and thus shows the ECB have a vast task ahead despite cutting rates and the recent recovery in EUR/USD. Nonetheless, USD weakness helped guide the pair above post-ECB highs of 1.3677 although, this move to the upside was largely capped by the move lower in EUR/GBP towards the 0.8000 handle with RANsquawk sources reporting fund managers selling the pair as month-end demand began to phase out. Looking ahead, tomorrow’s main data release from the Eurozone will be the German jobs report with the headline figure expected to show a fall of 10K for June, with ECB’s Nowotny also due on the speaker slate.GBP/USD
GBP/USD started the week on the front foot after comments over the weekend by BoE's Bean who said the BoE could unwind its QE programme once interest rates start to rise or shortly after and Goldman Sachs raising their UK GDP estimate. Despite a relatively neutral open, the pair was provided with some upside heading into the North American crossover as EUR/GBP moved back lower towards the 0.8000 handle and consequently led GBP/USD back towards year-to-date highs of 1.7063 to print its highest level since October 2008, with these gains cemented as today’s US data failed to draw any form of reaction. Looking ahead, the main data point from the UK is the manufacturing PMI release exp. 56.8 vs. Prev. 57.0.USD/JPY
Overnight, USD/JPY fell amid month-end exporter selling and after the pair closed below its 200DMA on Friday for the first time since October 2013. A weak industrial production release from Japan (M/M 0.5% vs. Exp. 0.9%), then provided JPY with further strength and continued the pair’s descent, while a slew of option expiries at 101.45-50 (1.5bln) and 101.65-70 (400mln) kept the spot price in check. Thereafter, throughout the European session, the pair remained relatively unchanged for the session as USD clawed some territory back against JPY, with the US data this afternoon failing to provide USD/JPY with any further direction. Looking ahead, participants now await the BoJ Tankan survey with analysts at HSBC expecting the release to come under close scrutiny as it is the first since the April 1st sales tax hike although write the downturn has been less severe than feared in March.
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