Single Currency Suffers On Growth Concern

The single currency fell against the greenback today after growth concerns sent sentiment toward the monetary union diving as the French economy re-entered recession and the German economy grew far below forecast. The French and German numbers amounted in a firm break of the 1.29 handle to the downside, sending the pair to a six-week low at 1.2843. The fall marks the fifth straight session of declines, opening up further vulnerability -- particularly as the USD-index trades at close to 12-month highs. Lows in early April are seen at 1.2747, with 1.2679 marking the 61.8% retracement of the 1.2042 -- 1.3711 rise. Tomorrow’s session brings the weekly U.S. jobs data and the Philadelphia Fed survey, as even today’s poorer U.S. data fails to take the shine off the U.S. currency.

GBP/USD
The pair saw initial upside in the wake of the Bank of England’s Quarterly Inflation Report headlines, as the Bank’s economists upgraded their growth forecasts for the horizon period and lowered their inflation projections. King’s final press conference turned out slightly more hawkish than expected, as the governor pointed out a return to normalized rates must occur in the future -- citing a 3% level of interest as a desired figure. Offers at 1.5280 in the pair kept GBP from registering too much strength, and eventually fell as the USD picked up momentum and King reiterated that negative deposit rates were always an option in the MPC’s toolbox. The drove the pair through the 1.52 handle to print a low today at 1.5174. Future data will shed further light on how accurate the BoE’s forecasts turn out to be, however tomorrow’s session remains quiet, so focus sticks with the USD.

USD/JPY
USD/JPY continued its seemingly exponential rise in early European trading hours as the pair rose to 102.76, marking a fresh YTD high, after offers at 102.80 ahead of touted barriers at 103.00 topped the pair. The USD-index looked to test the 84.10 mark today -- June 2012’s high print -- but the upside was limited after Empire Manufacturing and U.S. Industrial Production missed forecasts. The faltering USD led the pair to session lows of 101.85 -- but the momentum was short-lived as stocks in the U.S. rallied and attention turned to tonight’s GDP figure from Japan, expected to show growth at 0.7% Q/Q and 2.7% Y/Y.