USD/JPY Under Heavy Selling Pressure

EUR/USD
The pair finished the London session relatively unchanged in what was a somewhat directionless day of trade with a lack of tier 1 data to guide price action. The pair was initially lifted higher in the first half of the session amid a weaker USD which resulted from a strengthening JPY following demand for safe-haven assets as the Chinese Trade Balance disappointed participants and resulted in risk-off sentiment. However, these early gains were then pared as USD then regained some ground against JPY, in a move which filtered through to EUR/USD. In terms of economic commentary, from the Eurozone, ECB’s Noyer said rate cuts not 'too controversial' for the ECB, adding that economic data has been inline with baseline scenario and economic conditions are inline with monetary policy at this stage. However, this did little to influence the price action and thus saw the pair finish the session largely unchanged.

GBP/USD
GBP was one of the notable underperforming currencies in FX markets after being put under heavy selling pressure following reports about Vodafone and Rolls-Royce. The stock news put downward pressure on GBP with press reports indicating that Co. said to raise offer for Ono to USD 9.7bln before IPO. This came reports that Ono shareholders said to be moving ahead with plans for Madrid listing. Elsewhere, for Rolls-Royce, it was reported that Daimler will sell a 50% stake valued at GBP 1.9bln in an engine joint venture to partner with Co. holdings. In terms of economic commentary, BoE's Bean said further GBP strength would not be particularly helpful for UK exports and he sees BoE rate settling at 2-3% for some while. However, this did little to draw a market reaction as this is largely a reiteration of the BoE stance.

USD/JPY
Overnight, the USD/JPY was put under heavy selling pressure and testing the 103.00 level to the downside after the poor data from across the region encouraged a risk averse sentiment and supported the safe-haven JPY. However, these overnight losses were then pared as European participants came to market and saw a recovery in stocks as the negative sentiment from Asia-Pacific trade was shrugged off as it was revealed that the Chinese Trade Balance figure was somewhat skewed by the different timing of the New Year Lunar period this year and a clampdown on fake invoicing and copper financing weighed on the overall trade balance. Elsewhere, out of Japan participants were presented with Japan’s Final Q4 GDP reading which came in line with expectations and thus was overshadowed by events in China.