GBP outperforms, benefiting from M&A related flows, while commodity currencies continue to see strength on the back of recent upside in energy prices
GBP has been today’s notable outperformer, benefiting from M&A related flow relating to the revised SABMiller (LONDON:SAB) bid from AB InBev (NYSE:BUD), despite the bid being rejected midway through the European session. GBP was further bolstered by higher than expected industrial and manufacturing production data (Industrial Production M/M 1.0% vs. Exp. 0.30%), which saw GBP/USD reach its highest level since September 23rd.
Elsewhere, the main focus during Asia Pacific hours fell on the BoJ policy decision, whereby the BoJ kept monetary base unchanged at JPY 80trl as expected. The BoJ went on to say it is to look out for risks and adjust policy as appropriate, adding that CPI is likely to be around 0% for the time being, but will continue QQE until 2% CPI is stable. This saw a bout of strength in the JPY, with USD/JPY initially falling below 120.00 and remaining around this level for the rest of the session.
Separately, commodity currencies have continued to benefit from strength in energy prices today. The likes of CAD and AUD have seen strength throughout the day as has been the case in recent days, bolstered by the likes of WTI and Brent crude futures gaining by around USD 1.00 for most of the day in the wake of yesterday’s drawdown of 1200K in the API crude oil inventories. However, the larger than expected build on DoE crude oil inventories limited gains in the energy complex prior to the European close.
Looking ahead, tomorrow sees the BoE rate decision and accompanying minutes, the minutes from the September ECB and Fed rate decisions as well as US weekly jobs data and comments from BoE’s Carney and Shafik, ECB’s Praet, Draghi and Coeure and Fed’s Bullard, Kocherlakota and Williams.