Currency Pair Overview The Majors Awaiting The Two Central Banks

Overall, the Asian session ran under the influence of the two very important central banks meetings. Both the RBA and the BoJ were expected to communicate their new monetary policy stand during the Asian session. Despite this, none of the majors were able to have a proper trend in the Asian session, and furthermore the pairs traded somehow split, at least before the official reports.

The Euro (EUR/USD) fell for a second consecutive day, yesterday. The pair traded more in a wide range, having the daily ATR reach somewhere around 100 pips. On the downside, the pair found a support near the 1.26 area. The same support level was tested again in the Asian session, but for now the euro failed to break any lower

The Pound (GBP/USD) tumbled even from the first minutes of trading yesterday, finishing the day more than 500 pips lower. The move happened as most market participants expect a huge rate cut from the BoE in the next few days, reducing the yield differential even more.

The Aussie (AUD/USD) failed to break under the 20-day moving average yesterday, falling 150 pips by the end of the day. The pair is struggling to break above the resistance level for almost two weeks now, but it seems unable to pull a decisive move. In the Asian session, the pair fell another 50 pips and managed to break under Monday’s low as the market awaited the RBA’s interest rate decision.

The current account deficit fell 31 percent for the third quarter of 2008. This is the second straight quarter that the deficit has narrowed. This was partly due to exports such as coal and iron ore whose demand rose. The current account deficit is expected to decrease to around 4 percent of the gross domestic product which will be the smallest amount since 2002.

The Cad (USD/CAD) traded very volatile yesterday, trying to break above TheLFB R1 (1.2470). The cad’s trading range reached a little more than 200 pips, but most of the time, the pair moved in a relatively small area. In the Asian session, the pair fell 20 pips.

The Swissy (USD/CHF) followed the same pattern of trading again, small ATR but very chaotic moves. At the end of the day, the swissy fell 115 pips, despite that both the euro and the pound had declined against the dollar yesterday.  

The Yen (Usd/Yen) plunged yesterday a little more than 250 pips, as risk aversion was back into the market. The yen fell all the way down to the 93.00 area, where it bottomed. In the Asian session, the pair rose 80 pips, awaiting the Bank of Japan’s monetary policy measures, taken in an emergency meeting.

The Japanese monetary base came in with a reading of 1.9 percent year over year in November. This was after the monetary base rose 1.4 percent in October. On a seasonally adjusted basis, the annual money supply has risen by 7.9 percent which is up sharply from the previous months 6.6 percent increase. Current account balances have also increased 11.3 percent year over year. Banknotes in circulation rose 1.1 percent when compared with the previous months 0.8 percent rise.