GBP/USD
Overnight, GBP/USD touched its lowest level since August 2013 as the US Dollar Index continued its surge following Friday’s impressive NFP headline number. However, since the European equity open GBP/USD reversed course while breaking its 1.5600 handle and showing outperformance among its neighbouring major pairs as it continues to trend higher as it is the only major central bank besides the Fed eyeing rate hikes. Interestingly, the BOJ, ECB, RBA, PBOC all have a dovish bias and its respective currencies have all traded close to multi-year lows against the greenback with CNY trading at its lowest levels since August. Furthermore, weekend reports from the BoE surfaced suggesting that the UK could withstand a rate hike is also aiding the subsequently firmer GBP.
Looking ahead, tomorrows sees the release of UK Industrial and Manufacturing Production with both M/M figures expected to slip from their previous’.
EUR/USD
EUR/USD fluctuated intermittently between gains and losses but has remained within a 30 pip range as the USD-index has since pulled off March 2009 highs throughout today’s session with the USD up more than 10% YTD against the EUR. Moreover, the recent pullback in the USD-index had abated the EUR from further downside after downbeat comments from ECB’s Nowotny saying that the ECB sees ‘massive weakening’ in the Euro-Area economy which subsequently dampened sentiment throughout the Eurozone in fitting with last Thursdays ECB press conference. As a reminder, tomorrow sees a host of EU Finance Ministers convene for a meeting in Brussels.
USD/JPY
Overnight, the final reading of Q3 Japanese GDP SA Q/Q -0.5% vs. Exp. -0.1% (Prev. -0.4%) was confirmation that the economy was in a deeper recession phase than previously expected which halted USD/JPY’s further move to the upside after reaching 7y highs of 121.85 failing to break 122.00 level after subsequent JPY strength. The USD-index has sustained the move to the downside after printing overnight multiyear highs which has seen USD/JPY trade back below 121.00. Overnight sees an absence of tier 1 Japanese data with movements for the pair likely to be dictated by fluctuations in the USD-index.