EUR/USD
Amid ongoing USD strength after the hawkish FOMC yesterday, EUR/USD edged downwards throughout the session, overshadowing the German CPI and European consumer confidence numbers. The pair broke below the USD 1.2600 handle before the start of European trade, and continued the move, stopped only by the release of US GDP (3.5% vs. Exp. 3.0%). The USD strengthened initially on the release, with EUR/USD printing its session low at 1.2548 as a result, however the move was quickly pared as the news that Govt. spending rose 4.6% in Q3, the most since Q2 2009 and indicated a lack of consumer driven growth. These combined to weaken the USD which moved back towards the 1.2600 level. Further upside had been held back by around 2.3bln options at 1.2600-05 which, when rolled off at the 10am New York cut, removed resistance and the pair consolidated above 1.2600 heading into the close. Looking ahead the US Chicago PMI and Univ. of Michigan Confidence data points offer price action for the US session tomorrow, while EU CPI Estimate will dictate price action for the morning.GBP/USD
Having broken below the key psychological level at 1.6000 GBP/USD traded sideways for much of the European session, in a similar manner as its continental peer. The FOMC hawkishness and subsequent USD strength kept GBP under pressure from the get go, yet heading into the North American cross over the pair broke back above the 1.6000 level as the USD came of its highs. The better-than-expected US GDP figure applied fresh pressure to the pair, which printed session lows at 1.5952, yet on similar concerns as EUR/USD with participants looking slightly deeper into the release, the pair moved firmly back above the 1.6000 handle moving towards the close. Looking ahead the lack of UK data tomorrow means the pair’s price action will again this week be dictated by US data points, notably US Personal Income and Spending.USD/JPY
Price action in USD/JPY has been predominantly dictated by movements in the USD following the more hawkish than expected Fed release, as per the other major USD pairs. Overnight some cross-related selling in AUD/JPY helped limit gains for the pair, yet the 109.00 handle was firmly broke to the upside. Since the European session the pair has traded around the 109.00 handle with little to direct price action. As with its fellow USD pairs, the JPY took a move higher on the US GDP release and has since come away from its session highs, at 109.36, as the USD weakens. Attention now turns to the BoJ rate decision and monetary policy statement, where the expectations are for the BoJ to keep rates and policy on hold. There will also be a selection of Japanese data-points, notably Japanese construction orders.
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