EUR/USD resisted the safe-haven bid supported by a higher EUR/GBP

EUR/USD

Despite the risk-off sentiment that acted as a major source of price action across FX markets, EUR/USD managed to resist the safe-haven bid with EUR supported by the move higher in EUR/GBP. EUR/GBP was seen higher throughout trade with the pair recovering from yesterday’s September 2012 lows with the move being attributed to demand from corporate names. Further upside momentum for EUR/USD was then provided with prices being supported by talk of sovereign bids into 1.3500. At the same time, EUR/USD also saw prices held up by likely inflows into EU related assets by Russia companies, seeking to reduce the impact that sanctions will have on operations. Today’s main data release from the Eurozone came in the form of Eurozone CPI although, these readings were final and came in line and thus failed to weigh on the pair. Elsewhere, comments from ECB’s Hansson saying ECB asset purchases are not imminent or needed now, were not met with any reaction as the comments were broadly in-fitting with recent ECB commentary. Looking ahead, tomorrow sees a lack of tier 1 Eurozone data, but ECB’s Costa and Weidmann are due to speak and Fitch are due to publish their sovereign debt rating for Germany. 

GBP/USD

With a distinct lack of newsflow or data releases from the UK, price action was largely guided by the movements in EUR/GBP, with the cross moving back above the 0.7900 handle in a recovery of yesterday’s heavy losses. Nonetheless, prices were eventually supported at 1.7100 with a lack of notable newsflow to exacerbate the move lower as BoE’s Cunliffe did not make any comments on UK monetary policy in his earlier speech. Looking ahead, tomorrow once again sees an absence of tier 1 UK data and as such events may continue to be dictated by EUR/GBP or any further geopolitical developments between Russia and the West. 

USD/JPY

USD/JPY traded lower overnight amid a safe-haven bid amid geopolitical concerns as Russia was once again in focus following increased sanctions from the US targeting the country’s largest lenders, while EU leaders asked European Investment Bank (EIB) to suspend new lending for Russia. This saw the pair break below yesterday’s lows of 101.64 and below the 101.50 level. There were also reports during the session that Russia hat show down a Ukrainian war plane yesterday, although these failed to add much to the earlier downward price momentum. With a distinct lack of notable commentary or Japanese tier 1 data, unfavourable interest differential flows provided the bulk of today’s price action with USTs seen higher throughout the session. Looking ahead, any further developments regarding Russia and the West are likely to continue to dictate prices with a lack of key events due out of Japan tomorrow.