The Forex market took a much needed breather in Wednesday’s Asia session.  Following another wild and unpredictable New York session which saw an explosive move higher in U.S. equities and JPY crosses, currency traders looked to digest most of the pairs’ recent gains.  With no top tier data out during the session, the bulk of the majors were able to hold onto gains made against the dollar over the past 24 hours without much effort.

Many of the majors continued to trend higher against the greenback.  EURUSD continued to recoup losses suffered at the opening of the trading week.  After consolidating in late New York trading around 1.4580 , the pair enjoyed a steady march higher for much of Asia.  Running into some light resistance around 1.4630, traders made a final push through and were able to take out offers, allowing the pair to quickly deal towards 1.4560.  AUDUSD also punched through levels not seen since early in the trading week, taking out offers around .9000, to advance nearly 75 pips on the session to the .9030s area.

JPY crosses continued north as well, with Japanese stocks advancing in wake of Wall Street’s big day.  By late Asia trading, EURJPY was firmly over the 162 level, to the 162.70 area,  about 75+ pips higher from the opening rates.  The benchmark carry trade wasn’t alone, as NZDJPY dealt 200+ pips from New York lows to deal around 85.00, and AUDJPY rebounded 100+ pips to make a run at 100.00 once again.

Ahead in the upcoming London session, the main economic focus will be United Kingdom employment numbers expected at 4:30amET.  Forex traders will also be looking be signals that the resumption of USD selling and carry buying are for real.  Many see the global run higher in equities as a “dead cat bounce”, expecting the risky assets to soon retreat, taking the high yielding crosses with them.  Will we see a second effort by the dollar, another round of risk aversion, or continued consolidation in the short term?  As we’ve become accustomed to over this past week, market sentiment can turn on a dime at any moment. 

Upcoming Data Releases (London Session):

  • UK: 0430 Claimant Count Rate; Consensus 2.6%
  •                  Jobless Claims Change; Consensus -6K
  •                  ILO Unemployment Rate; Consensus 5.4%