GBP Gains Against USD, USD/JPY Edges Higher

The USD-index’s movements have been rather limited ahead of the key risk event in the form of the FOMC rate decision later tonight, with the central bank expected to affirm its signal that rate lift-off will occur at some point this year. Investors have all but ruled out the possibility of a rate hike in June, given the slowdown in Q1, although officials have mostly attributed the weak data to transitory factors. However, heading into the European equity cash close, the greenback was given some impetus on a technical break above the 95.00 handle. Nonetheless, GBP/USD gained ground against the USD following the stellar UK jobs report, which showed a pickup in wages, and subsequently overshadowed the BoE June Minutes, which was largely a reiteration of the recent rhetoric from the BoE. Comments circulating from Eurozone officials regarding Greece have been largely shrugged off by the EUR, with German Finance Minister Schaeuble reportedly providing the market with more downbeat comments, suggesting that Schaeuble will tell lawmakers to make plans in preparation for no agreement with Greece. Following this, sources indicated that Greece is prepared to make concessions; however, they reiterated that pensions will not be touched, which failed to have a sustained reaction in the EUR. Separately, CHF was bid earlier in the session on touted safe haven bid, lack of liquidity and uncertainty over the FOMC and pre-positioning ahead of the SNB policy meeting day; however, it lost its appeal as the session dragged on.

Over in Asia, USD/JPY broke yesterday’s high of 123.80 and has continued to edge higher following the weak Japanese Trade Balance, which saw (Exports Y/Y 2.4 vs. Exp. 3.0) miss on expectations. Elsewhere, AUD was notably sluggish overnight amid continued weakness across iron ore prices, with Dalian iron ore futures now on course for their steepest decline in a month. Consequently, AUD crosses trade markedly lower led by AUD/JPY following a break below its 200 DMA.

Looking ahead, tomorrow sees the release of the SNB, Norwegian Rate Decisions, UK Retail Sales, US CPI, Weekly Jobs Reports, Philly Fed Business Outlook, EIA NatGas Storage Change, as well as comments from SNB President Jordan, Norges Banks Olsen, ECB’s Draghi (Soft Dove) and Coeure (Dove).