USD/JPY Sees Heavy Losses

EUR/USD
The pair failed to benefit from a better bid EUR/GBP cross and was largely driven by an unwinding of long USD/JPY positions, which consequently resulted in heavy downside pressure for EUR/JPY. Still, losses were capped by broad based GBP weakness, which in turn resulted in EUR/GBP trending higher for much of the session and testing the 50DMA in the process. There was little in the way of economic commentary from the Eurozone, however, Portuguese bonds outperformed their peers with Portugal saying it may sell bonds via auction before mid-May and are not under pressure to sell bonds. Furthermore on a fixed income note, the Belgian-German spread tightened ahead of tomorrow’s Belgian 10y syndication. Looking ahead, there is a lack of tier 1 data from the Eurozone for the rest of the week for participants to digest, however, tomorrow does see the release of the Retail Sales figures from the US.

GBP/USD
GBP was one of the underperforming currencies for the session following talk of real money selling of GBP against a basket of currencies, particularly AUD, which saw GBP/AUD print the lowest level since December 12th. A level that was observed following RBA's Stevens commenting that Australia needs an exchange rate closer to 0.8500 in AUD/USD. This alongside a resurgence in the USD index after, coming off it’s overnight lows saw GBP/USD move below the key psychological 1.6400 handle. With an absence of tier 1 data from the UK, this provided most of the direction for the session. In terms of economic commentary, RBS issued a note that recommended buying short-sterling, which would lead to a flattening of the curve. Looking ahead for the pair, tomorrow sees the release of UK CPI which may act as a further source of clarity for markets given the recent disappointing figures from the UK.

USD/JPY
With Japanese participants away from market with the Coming of Age day, USD/JPY traded with heavy losses and below the key 103.50 level. Overnight USD/JPY tripped stops through 103.80 which lead to an aggressive move to the downside amid a continuation of post NFP USD weakness. The pair was aided by AUD strength which saw a weaker EUR and GBP and some cross-driven gains for JPY in EUR/JPY and GBP/JPY. As a result of Japanese market closures, there was little in the way of economic commentary from Japan, this combined with a lack of tier 1 data from the country this week will mean that events in the US could prove to be of crucial importance for the pair with a host of Fed members due to speak.