The final Asia session of the week seemed to begin on an eerily quiet note following a wild week reminiscent of the dog days of August. With no major economic data on tap for the session, currency traders were eagerly awaiting the open of Asian equity markets. The previous New York session set the stage, as recent correlations weren’t written in stone as we have seen in the past. Despite a sharp selloff in US equities for most of the day, the high yielding crosses showed unusual poise with a limited decline. These carry pairs moved much more freely to the upside when stocks began to push higher towards the end of the session.
After the market moved sideways for the first few hours of the session, price action really picked up coinciding with the Tokyo fix and higher Asian equities. In what appeared at first to be a dollar move lower, EURUSD caught a bid and blew through the 1.4700 handle once again and picked up steam to make all time highs yet again into the 1.4730s. In the midst of this upstart volatility, it became apparent however, that the crosses would again see most of the price action. Continuing where it left off in the NY session, EURJPY began to move higher in the Tokyo morning. The high yielder dealt a whopping 150 to the upside from the previous session’s lows to around the 166.00 level, where stiff offers pushed the pair back down. CADJPY would also see its fair share of upside gaining 100+ pips to the 121.50 area. AUDJPY and NZDJPY would also participate in the dumping of the “risk aversion” attitude, as investors bid the pairs 100+ pips higher each.
Most of the majors were dealing off their highs against the greenback as the session entered late trading, and most of the carry pairs had also slightly retreated. Ahead in the upcoming London session, Forex traders will still be focused on the unprecedented levels of EURSUD and GBPUSD. The JPY crosses will also certainly be on the market’s radar as well. Have we seen the exhaustion move higher for Euro and the rest of the majors? Will the dollar begin to reverse course? Where will we close this wild week? We’ll get some more clues soon enough!
Upcoming Data Releases (London Session):
- UK: 0430ET Visible Trade Balance; Consensus -6900GBP
- Trade Balance (Non EU); Consensus -3900GBP
- Total Trade Balance; Consensus -4100GBP
