A quiet session in the early stages was followed up by a surge in the USD, which came out of nowhere and produced some significant moves among the majors. The only notable data release was the German Ifo survey, which came in stronger (vs expectations) on all counts, but significantly so in business climate, but to limited effect on EUR/USD.
Indeed, the pair was hit lower to touch on 1.0850 again as USD/CHF ramped up to parity alongside EUR/CHF, but the spot rate was leading the move, and which has since slipped back to into the mid .9900’s. EUR/CHF has maintained a 1.0800 handle throughout, but focus was on EUR/GBP as the cross rate rallied to .8970-75 levels on the back of a sharp hit on Cable.
Earlier in the day, tests on 1.2250+ were swiftly rebuffed, but the USD based move gathered momentum on the downside as Cable slid through 1.2200, dipping through 1.2100 also and taking out a large chunk of orders in and around the figure. There as little behind the move, so a large order or stop hunt was blamed, and despite a measured address by BoE Carney to the Lords committee, GBP remained well offered into the London close and a test on 1.2000 looks imminent unless sellers are back in in EUR/GBP.
London saw a calmer session for USD/CAD, after the roller coaster ride seen in the wake of BoC’s Poloz comments which were misinterpreted. The drop from near 1.3400 based out around 1.3275-80, and we look more likely to retest this – in the near term at least – rather than 1.3400. AUD/USD is still pressing higher, eyeing a move on .7700 higher up, despite the weak jobs report last week and the inflation stats due out in the session ahead.
NZD/USD is a little more restrained in the mid .7100’s. Finally for USD/JPY, it has all been about US yields, but as far as we could see, this was little changed, if not marginally lower – in the 10yr specifically - so the move on 105.00 was led by FX specs testing the much touted offers seen ahead of this level. These held firm, and with little movement in stocks, we may see a move back to 104.00 again, with this level having provided a pivot in the last few weeks.