EUR/USD
Despite a lack of pertinent newsflow or tier 1 data from the Eurozone, the pair started the session on the backfoot with some analysts noting M&A related selling of the pair after pre-market news that GTECH (GTK IM) has bought US Co. International Game (IGT) for USD 4.7bln. Elsewhere, Commerzbank attributed the fall in EUR to investors starting to price in the normalization of monetary policy by the Fed. From a technical perspective, further cause for downside stems from EUR/USD rejecting an attempt to breach its 50DMA to the upside, with the pair seen lower since the failed attempt. Further negative sentiment also stemmed from investment bank recommendations with UBS recommending shorting the pair at 1.3540 with a target of 1.3250 citing the MACD settling below zero which indicates continued downside in the near-term. With a lack of price action stemming from today’s US data releases, the pair continued its downtrend towards 1.3500 where there was a touted option barrier before meeting bids at 1.3510-20. Looking ahead, attention in the Eurozone will be placed upon tomorrow’s Eurozone final CPI reading which is expected to come in line with its preliminary reading of 0.50%.
GBP/USD
The pair started the session in a relatively rangebound manner with all eyes placed on the UK jobs report. Despite the headline unemployment figure falling to 6.5% from 6.6% and the larger than expected fall in jobless claims, focus turned to weekly earnings ex-bonus which fell from 0.9% to 0.7% to print its lowest reading on record. This release came just one day after UK CPI far exceed expectations thus indicating that there is still plenty of slack in the economy, which the BoE believes needs to be reduced further before the Bank enacts on any rate hikes. As such, the pair saw a fast-money move lower of around 30 pips, however this move was eventually pared alongside the move lower in EUR/GBP as GBP out-muscled the EUR currency and sent the cross below the crucial 0.7900 handle to reach its lowest level since Sep’12. Looking ahead, tomorrow sees an absence of tier 1 data from the UK, while BoE’s Cunliffe is due to speak in London.
USD/JPY
Today saw an incredibly muted day of trade for the pair with USD/JPY trading in an extremely narrow range of around 15 pips. Overnight, the pair failed to be provided with any direction following the Chinese GDP release which exceeded expectations of 7.4% by coming in at 7.5%. Despite, succumbing to a modest bout of weakness alongside the European open, a distinct lack of economic commentary or market-moving data from the US ensured the pair stuck within its modest range, with interest differential flows failing to come into play. Also of note, the pair fell short of offers and stops tipped at the 101.80 level and thus ensuring the pair saw the session out relatively unchanged. Looking ahead, tomorrow sees a lack of tier 1 data out of Japan and thus the pair may be provided more guidance by events Stateside with the release of the weekly US jobs report, housing starts, building permits and Philadelphia Fed business outlook.
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