JPY was the only currency to outperform the greenback

EUR/USD

After yesterday’s sharp price swings, EUR/USD saw out the session well within yesterday’s ranges. Initial support in the European morning after Eurozone Core CPI was revised up to 0.8% from 0.7%, however over-riding USD strength amid negative European equities dropped the pair through 1.2800 as attention shifted to Greece. The Greek 10yr yield shot higher in an uninterrupted move as the market continued to throw water on Greece’s plans to exit the EU/IMF bailout by the end of the year. Additionally, the latest opinion polling shows Tsipras’ left-wing SYRIZA party still holding a 6.5ppt lead over Samaras’ New Democracy-led coalition – suggesting political uncertainty could rear its ugly head in the very near future. 

AUD/USD

AUD began the Asia-Pacific session on the back foot, as softening commodities knocked the CAD, NZD and AUD early doors. Despite this, AUD/NZD fell as chatter circulated of a large German bank issuing a sell recommendation on the cross. The 0.8800 level was finally broken as a NY fund sitting on AUD/JPY set the tone for the European morning, as sliding industrial metals prices (Chinese Dalian iron ore futures fell 4% overnight) weighed on the currency. September 29th’s daily high of 0.8770 failed to hold as the pair targeted the handle, with October 1st’s daily low (0.8663) also providing support. 

USD/JPY

US yields fell for another session today, taking further steam out of the USD’s 2014 rally, with the JPY the only currency outperforming the greenback. Markets found little solace in comments overnight from BoJ’s Kuroda, who reiterated that the Bank of Japan are to continue their Qualitative and Quantitative Easing programme until the 2.0% price target is achieved. The overriding negative sentiment in the bear is evidenced in the tenkan and kijun lines remaining negatively aligned – a trend that is fundamentally backed up by the Nikkei 225 officially entering correction (down 10% from September’s highs), with the market losing hope that the Bank of Japan will reignite the rally by injecting stimulus in the near future. Sources suggested the BoJ are on track to keep policy, CPI forecasts roughly unchanged at Oct. 31 meeting.