Talking FX: EUR/USD Traded In Negative Territory

EUR/USD

The pair traded in negative territory throughout the London session amid broad based USD strength. In the US session there was commentary from Fed’s Fisher and Plosser which struck a particularly hawkish tone saying that they both see an end to the Fed’s QE in late 2014 despite the recent disappointing Jobs report from the US. This alongside a weakening JPY as the Nikkei 225 retraced yesterday’s heavy losses, ensured that USD strength set the tone for the session and moved the pair lower. This move was then further exacerbated by talk of corporate names selling the EUR/GBP and leveraged names selling the EUR, with the significantly better than expected Empire manufacturing figure from the US also weighing on prices. With an absence of Tier 1 data from the Eurozone and a lack of currency moving commentary, the aforementioned factors lead the downward momentum to be observed throughout the day’s trade. Looking ahead for the pair, there is a lack of tier 1 data due for release from the Eurozone, however, any further commentary from Fed speakers following these recent comments could be of particular importance for the pair.

GBP/USD

With there being a distinct lack of market moving data points or economic commentary from the UK, similarly to the EUR/USD, the pair’s price action was largely controlled by the across the board strength in USD. However, it is worth noting that due to the already mentioned talk of corporate names selling the EUR/GBP, the USD inspired direction for the pair was not as extensive as that observed in the EUR/USD. Nevertheless the aftermath of the US Empire Manufacturing release saw the USD index break back above the key 81.00 level and consequently saw prices extend their losses. Looking ahead for the pair, market participants will not be presented with much in the way of data until Friday’s retail sales release.

USD/JPY

The recent USD strength against JPY set the tone across FX markets today as the pair moved towards the key psychological 104.50 level in the Asian session alongside the Nikkei 225 posting its biggest one-day gain in four months. This combined with the commentary from Fed’s Lockhart and Plosser and growing speculation that the BoJ are set to ease their monetary policy stance ensured the pair gained throughout the session in a continuation of yesterday’s move to the upside for prices. Looking ahead for the pair, any commentary from Japan or the US on the future of monetary policy may be a key focus for market participants, with markets also getting the chance to digest the latest upcoming CPI reading and weekly jobless figures from the US.