EUR/USD
In the first half of the European session, President Draghi confirmed the ECB are ready to conduct a sovereign bond programme which garnered a particularly muted reaction in EUR/USD as this announcement was in line with market expectations. However, the pair continued its downward trend after the European Court of Justice (ECJ) declared that the OMT bond buying plan may be legal and is in line with EU law in an interim ruling which is a positive for the legalities for the impending ECB sovereign bond purchase program. As a consequence, EUR/USD fell back to the same level from when it was the EUR was first launched in 1999. Into the second half of the session the pair retraced all of its earlier losses after a disappointing US retail sales advance headline number (-0.9% vs. Exp. -0.1%) with general merchandise store sales failing by the most since 2010.
AUD/USD
AUD/USD was under heavy selling pressure following the ‘heavy slide in copper prices after the World Bank cut their global forecast to 3% from 3.4% with weakness filtering through to neighbouring metals. Furthermore the World Bank also cut China’s GDP to 7.1% from 7.2% further weighing on the pair as China is Australia’ biggest trade partner with the mining sector accounting for up to 10% of Australia’s GDP. The pair broke below the 0.8100 handle, however, approaching the European close retraced all of the earlier weakness as the USD weakened in reaction to the particularly weak US retail sales data. Looking ahead, focus will be on Australian Employment Change (Dec) M/M Exp. 5K (Prev. 42.7K) scheduled for (0030GMT/1830CST) .
USD/JPY
Overnight, the JPY saw some strength underpinned by safe have flows after subsequent slide in copper prices hitting 5 and a half year lows which then weighed on commodity currencies, with JPY crosses notably AUD/JPY, CAD/JPY, NZD/JPY and EUR/JPY down around a point in today’s session. Consequently, this has weighed on USD/JPY as it broke below 117.00 and touched session lows of 116.07, a 4-week low, shortly after the US numbers.