As expected, tight FX moves in the key USD rates, with notable losses in USD/JPY as we broke below the Friday base, but running into fresh bids ahead of 101.40 and 101.20. This week’s BoJ meeting comes just ahead of the FOMC, and many are pre-empting an on-hold policy given the lack of efficacy in negative rates implemented earlier in the year. Alongside an on hold Fed (for now), this points to a retest on the downside levels seen in late Aug, with the mid 102.00s well contained in Friday’s post US CPI rally.
Elsewhere, GBP looked to be enjoying some near-term reprieve, but EUR/GBP buyers are coming in around .8335-40 or so, coinciding with a EUR/USD push back towards 1.1200 on the dip in the USD ahead of this week’s main event. Cable found strong demand just below 1.3000 late Friday and in Asia today, so we look to be caught in a rock and a hard place here, with the EUR cross rate dictating trade in the meantime. EUR/USD support comes in around 1.1140-45, ahead of strong bidding zone seen circa 1.1120-30.
For the commodity currencies, AUD looks the better supported of the pack, with AUD/NZD looking above 1.0300 again, but the CAD is also testing the demand seen in the mid 1.3100s, with oil prices moving (very) modestly higher late in the day. Tuesday could liven up a little with Japan back from holiday, but no one is expecting any major direction ahead of the central bank announcements on Wednesday.