EUR/USD
With a lack of tier 1 data or pertinent economic commentary from the Eurozone despite the plethora of central bank speakers due to on speaker slate, price action for the pair was largely cross-driven. Initially EUR succumbed to the continued strength seen in the USD index, with the index trading modestly below its 2013 highs of 84.75. However, towards the mid-point of the session, EUR/USD staged somewhat of a comeback as the weaker AUD and JPY provided a boost to both EUR/JPY and EUR/AUD, with the pick-up in EUR strength also providing EUR/GBP with a lift as it broke above its 100DMA at 0.8029. Nonetheless, the move to the upside was short-lived as comments from the SNB suggested that the central bank would be willing to consider negative rates. Despite providing EUR/CHF with some upside, EUR/USD was seen lower following these comments as they potentially removed any hopes that the SNB could intervene in the market to protect their floor in the EUR/CHF by buying EUR. Looking ahead, attention now turns towards tomorrow’s host of ECB speakers with President Draghi, Lautenschlaeger and Coeure all due to comment.
AUD/USD
The pair was a key focal point for FX markets today as a result of printing a fresh 6-month low at 0.9188 after breaking below the 0.9200 handle for the first time since March 26, following a run on stops at the technical support level of 0.9238 (early and mid-August low). Analysts attributed the move lower in the AUD/USD to selling by Australian corporate names and an unwind of recent longs and carry trade positions. Furthermore, weakness in AUD, which is traditionally viewed as a commodity currency, followed the recent weakness in commodities with Gold futures falling to a 3-month low in New York while the Chinese import iron ore benchmark extended its losses to a fresh 5-year low. In terms of investment bank rhetoric, Citi recommended a new short on AUD/USD at 0.9281 with a target of 0.8950 and stop at 0.9420. They added the technical set-up on AUD/USD along with 3-month implied volatility suggests there is about to be a move higher in implied volatility and a move lower in the pair. Looking ahead, attention turns towards the Australian employment report, with the headline unemployment figure expected to fall from 6.4% to 6.3%, as well as the Chinese inflation data.
GBP/USD
In the early stages of European trade, GBP was broadly out-muscled by the stronger USD, with fears of an independent Scotland also weighing on prices and the move higher in EUR/GBP above its 200DMA providing GBP with further downside. However, all eyes for the UK were firmly placed on BoE Carney’s appearance in front of the UK’s Treasury Select Committee where the central bank governor was expected to potentially be questioned on the apprehension in the market surrounding the Scottish Referendum. The main takeaway from the TSC inquiry was comments from governor Carney that the point where rates need to rise has moved closer, this saw a fast-money move higher of around 30 pips in GBP/USD thus paring earlier downside and ensuring that the pair finished the session in positive territory. Looking ahead, focus for the UK turns towards any further insight in the vote split for the Scottish independence referendum with the Survation poll due later today at 2230BST/1630CDT.