Today's session was a relatively mundane affair for GBP/USD

EUR/USD

Overnight, the pair was largely guided by movements in the USD with the USD index trading lower by as much as 0.25% alongside the move lower in US yields. For the early stages of the session, this largely dictated the price action for the pair with a lack of pertinent tier 1 Eurozone data or economic commentary to halt its rise above the 1.2800 handle. However, these gains were swiftly erased by ECB source comments which said the central bank are considering buying corporate bonds, with purchases to then potentially begin in Q1 2015. This subsequently weighed on EUR/USD with the pair immediately slipping back below 1.2800 in a move of around 40 pips, with the move lower continuing as other newswires circulated the initial reports. This downward momentum was then halted following a piece by the FT which highlighted comments from an ECB spokesman that said the ECB have not put bond buying on the agenda. Nonetheless, the report by FT failed to completely pare the earlier losses and as such the pair saw the session out in negative territory. Looking ahead, attention tomorrow sees an absence of tier 1 data from the Eurozone, therefore attention may instead turn towards events Stateside with the US inflation report due for release.

GBP/USD

Today’s session was a relatively mundane affair for GBP/USD with a distinct lack of tier 1 data or economic commentary to guide price action, with participants largely unreactive to the UK public-sector borrowing release. Instead, participants chose to sit on the sidelines ahead of tomorrow’s BoE minutes release. It is expected that the vote split on the BoE’s interest rate decision will remain at 7-2 in favour of keeping rates on hold and 9-0 in favour of maintaining the current APF programme. Up until a few weeks ago, much of the focus surrounding BoE commentary was on who the likely targets were that could join Weale and McCafferty, with the UK economy in a relative promising position. However, last week’s UK CPI reading (1.2% vs. Exp. 1.4%, Prev. 1.5%) has largely eroded the discussion on the balance on views regarding rates at the BoE, with inflation in the UK residing well below the BoE’s 2% mandate. In terms of a market reaction, should the minutes reveal a 7-2 split as expected then any reaction is likely to be muted and short-lived given the shift in market expectations for a rate-hike by the BoE since last week’s CPI release. Furthermore, with the next BoE Quarterly Inflation Report due next month, it is likely that participants will see this as a greater source of guidance for forming rate path expectations than the minutes release.

USD/JPY

As has been the case over the past few weeks, movements in US yields have dominated the price action for the pair, with lower US yields overnight seeing JPY gain at the expense of the USD and the pair trip stops on the break below 106.50. In terms of economic commentary from Japan, Japanese Health Minister Shiozaki said he had absolutely no knowledge regarding GPIF reports of re-allocations into equities, which thus saw JPY erase some of yesterday’s losses and subsequently exert further downward momentum for the pair. However, alongside the ECB source comment inspired move lower in fixed income products, USTs followed suit and thus provided US yields with some reprieve and pared a bulk of the earlier losses and thus returned the pair back to relatively neutral territory. Thereafter, the pair continued to reside in relatively neutral territory with a lack of further data points or economic commentary to provide any further momentum. Looking ahead, attention turns towards the Japanese trade balance which is expected to come in at a narrower deficit than previous.