Global FX: Yen Follows Nikkei Higher

The pair settled the session little changed amidst ongoing dovish comments from various central bankers, as well as expectation that ECB’s Draghi will deliver a move dovish statement next month offset the release of an encouraging jobs report from Germany and solid Italian bond auctions. Of note, ECB's Mersch said that the ECB is to continue accommodative monetary policy and there will be no exit in foreseeable future. He added that the central bank won't give away OMT conditionality and that it has started set-up preparation for bank supervision. In terms of technical levels, supports are seen at 1.2991/85 and then at 1.2956. On the other hand, resistance levels are seen at the 200-DMA line at 1.3073 and then at the psychologically important 1.3100 level.

GBP/USD
The pair settled the session in minor negative territory after the release of the latest and final GDP reading revealed that although the Q/Q was left unrevised at 0.3%, the Y/Y was revised lower. As such, this means that the economy shrank 7.2% from peak, more than its previous estimate of 6.3%. There was little in terms of UK macroeconomic news flow and instead the price action remained a by-product of the risk on/off sentiment which continues to depend on the outlook for Fed QE tapering.

USD/JPY
The pair settled higher, which also supported the benchmark stock index, where the Nikkei 225 index settled up almost 3%. Yet again there was little in terms of Japan specific commentary, but overnight in Asia, even though the PBOC did not sell any repos or reverse repos, the borrowing costs continued to decline, with the three-month SHIBOR rate falling for fifth consecutive day. Going forward, it is widely expected that the liquidity position will improve further from mid-July, as the seasonal effects of the quarter-end fade and a large volume of maturing PBOC bills and government bonds injects cash into the market. Also of note, Japan officials said G-20 finance chiefs likely to discuss tapering of easy money policy in Moscow and that finance chiefs likely interested in hearing China views on money policy. The G-20 meeting is scheduled for the 18th-19th July. Technically, support levels are seen at the 21-DMA line at 97.51 and then at the 100-DMA line at 97.08. On the other hand, resistance levels are seen at 98.66 and then at the weekly Tenkan line at 98.75.