The buck was sold modestly in what was a rather lackluster London trading session.
Euro-zone producer prices came in much lower than expected at -0.8% for October.
This suggests inflation will be a lesser concern for the ECB and leaves room for the bank to cut rates in size. European bourses rallied and were currently up about 1.5% despite the horrid performance in Asia stocks earlier. This modest return in risk appetite helped Euro rally some.
EUR/USD added about 40 points into the 1.2660/70 area. The 1.2700 level looms as the trigger for further upside while the pair should find decent support into the 1.2550 zone. EUR/JPY meanwhile rallied a more modest 30 pips and was sitting near 118.10/20 just ahead of the NY session. The lack of economic data in NY today should have the FX market squarely focused on the goings on in US stocks. Futures are pointing to a 1.5% increase at the open and we would expect a better than expected performance to usher in a rally in JPY crosses.
Upcoming Economic Data Releases (NY Session) Prior Estimate
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12/02 16:30 GMT US Paulson to Speak on U.S.-China Strategic Economic Dialogue
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12/02 17:30 GMT US Philadelphia Fed's Plosser to Speak on Economy
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12/02 22:00 GMT US ABC Consumer Confidence 30-Nov -52 -53
