EUR/USD
EUR/USD has traded amid USD weakness through the session, reaching a high of 1.2715. The USD weakened as safe haven bids supported USTs resulting in rising yields and in turn decreased demand for the greenback. The German Regional and National CPIs failed to impact into the pair’s price action with most numbers largely inline. However, since reaching highs as the US came to market the pair has fallen back below the 1.2700 handle as Asian offers between 1.2700 and 1.2720 limited scope for further upside. Speculators now look ahead to the ECB rate decision on Thursday, where analysts at UBS say sovereign QE remains unlikely as euro area CPI may recover slowly and Goldman Sachs strategists say the ECB will probably announce the start of covered bond-buying programme.
NZD/USD
Inthe Asian-Pacific session NZD/USD fell over 150 pips reaching a low of 0.7709 and breaking firmly below the 0.7800 handle as the RBNZ and New Zealand Govt. labour to devalue their currency. The contribution from the RBNZ came in the form of currency sales data which showed that the central bank sold NZD 521mln in August, the largest amount since July 2007 and an indication of aggressive interventions. In conjunction with this data, comments from New Zealand PM Key who suggested that the NZD/USD’s goldilocks level was 0.65, resulted in the pair reaching February 2013 lows. The pair has since regained around 80 pips as the USD has continued to pull back from last week’s high through the European session, offering some reprieve for the NZD. Looking ahead, New Zealand data such as ANZ Business Confidence overnight on Tuesday, and the Fonterra Milk Auction look to be key events for the pair.
USD/JPY
The already weak JPY fell further as Europe came to market, coming close to but faltering before the 110.00 level, finding resistance at 109.75. This fresh weakness was on the back of Japanese PM Abe comments, who highlighted further risks to the economic outlook including the looming sales tax hike plans, poor weather clouding the outlook and the geo-political risks emerging from the Ukrainian/Russian conflict. As the session matured the pair pulled away from the highs close to the 110.00 handle amid ongoing session USD weakness, eventually reaching a low at 109.13. Looking ahead, the Japanese Retail Sales and Jobless Rate overnight Tuesday offer participants firm opportunity
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