Another mixed session, but no major surprises of the like we saw in yesterday’s session. The USD rates were all better contained, and if anything, continuing the retracement after yesterday’s surge, which saw EUR/USD hit 1.0850, USD/CHF parity and USD/JPY just shy of 105.00. Of note is better support seen in GBP, with yesterday’s recovery in Cable (from sub 1.2100) stopping shy of 1.2200, but now looking intent on testing the resistance seen from 1.2250. Plenty more sellers seen all the way up to 1.2325-30 and with EUR/GBP holding comfortably off .8900, players are cautious to chase this particular trade higher.
EUR/USD was testing 1.0950 before central bank sources were reported saying that the ECB was almost certain to extend its QE program beyond March next year. The reaction was limited however, with this coming as little surprise to many. Elsewhere, the commodity currencies have been under pressure, with CAD only reacting in a modest way to the surprise draw in crude in the DoE report. A 1.3300 handle has been maintained throughout as the market looks intent on pushing through 1.3400 at some stage.
AUD/USD sellers above .7700 managed to fade the rise in response to the headline inflation numbers released overnight. The core rate was as expected and this was not lost on players in early London, who managed to return the pair back into the mid .7600’s. USD/JPY is refusing to give up on higher levels in the meantime, so we look to a period of sideways trade ahead, where 104.00 looks to be the pivot point in sessions ahead.
Data wise, we saw the US trade deficit narrow while the services PMIs were better than expected, but further USD upside looks set to be tempered ahead of Friday’s US Q3 GDP release.