EUR/USD posted a stellar performance following heavy USD sell-off

EUR/USD

After a muted first half of the session, the pair trading with little direction, EUR/USD posted a stellar performance following the US cross-over as the USD sold off heavily on the back of falling UST yields. Specifically, the US 10yr yield resided below the 2% level for the first time since June 2013 as the S&P 500 erased all YTD gains amid the global equity sell-off and after weaker-than-expected US empire manufacturing (6.17 vs. Exp. 20.25); lowest since April and US retail sales (-0.3% vs. Exp. -0.1%). As such, demand for the USD plummeted and EUR/USD soared upwards, breaking the 1.2700 and 1.2800 handle to the upside in the process. The pair reached a session high at 1.2886, meeting resistance and has since been steadily retracing into the European close. Looking ahead to tomorrow, Euro-zone CPI and the weekly US jobs report will be the focus for markets.

GBP/USD

Initially trading without direction after the European open, the pair strengthened on the release of October UK jobs numbers, which showed real wage growth in the UK rose to -0.3% from -0.8% on an ex-bonus basis. As such GBP/USD was provided with a minor lift to hit highs of 1.5939, however this move was eclipsed after the US came to market, with the pair trading amid similar conditions as the EUR on aforementioned falling US yields and subsequent falling USD demand, which pushed GBP above the 1.6000 handle and gaining over 100 pips in process. However, as some positive sentiment returned to markets and UST pulled off highs, the move could not be sustained and the pair broke back below key 1.6000 level heading into the close. Looking ahead the calendar looks light for UK based data, however a host of US central bank speakers, notably Fed’s Yellen, as well as BoE’s Cunliffe are scheduled.

USD/JPY

Participants shrugged off the Japanese industrial production data overnight, with the heavy USD selling seen after the US cross-over dictating play for the session (as across other FX markets). As the USD sold off on risk-averse sentiment the USD/JPY tripped stops on the way through 107.00 and 106.00 to print fresh lows at 105.23, yet the move (as across other major FX pairs) failed to consolidate and USD/JPY bounced back above the important 106.00 handle. Looking ahead Japanese events appear light, however Philadelphia Fed Business Outlook complete a full session for the US tomorrow, as should offer price action for the pair.