GBP/USD Has Losses Of 200+ Pips; USD/JPY Sees Substantial Price Action

AUD/USD

The pair was a key focus for FX markets after falling around 200 pips throughout the week to reach its lowest level since March. The pair started the week on the back foot after Chinese imports fell to a 5-month low thus triggering global growth concerns, with the move to the downside exacerbated by the move lower in commodities which thus weighed on AUD. One of the other notable sources of weakness stemmed from the significantly better than expected Australian jobs report which was met with sceptical commentary with analysts at UBS saying the new job figure is like saying the number of new jobs in the US is 1.5 million, adding that it is a sample error. AUD/USD continued its downtrend with RANsquawk sources also reporting US funds said to be selling the pair. Towards the end of the week, the move took another leg lower with Asian hedge funds said to be placing further weight on the pair. Looking ahead, attention will turn towards next week’s RBA minutes with a lack of other notable Australian data points for participants to digest.

GBP/USD

The pair started the week off with losses of 200+ pips after a YouGov survey on Scottish independence published in the Sunday Times showed that the ‘Yes’ campaign stands at 51%, with the unionists on 49% — overturning a 22-point lead for the Better Together campaign in the space of a month. These losses were then extended on Tuesday as a poll from TNS painted the same picture for the momentum of the ‘Yes’ campaign. Despite being provided some support by hawkish rhetoric from BoE’s Carney who said the point where rates need to rise has moved closer, the pair still traded around 100 pips below last week’s level with the broadly stronger USD also weighing on the pair. In the latter stages of the week, the pair was dealt a final blow as the most recent YouGov poll confirmed the findings of the prior poll. Thereafter the pair traded relatively mixed as markets remain particularly uncertain over the outcome of the upcoming vote with many saying it is too close to call. Further speculation over Scottish independence is likely to follow through with the actual vote to take place on Thursday. Elsewhere, attention will also be placed on the upcoming minutes release, with participants waiting to see if any further MPC members followed Weale and McCafferty in voting for a rate hike at the most recent meeting.

USD/JPY

USD/JPY also saw substantial price action this week after printing 5 consecutive sessions of six-year highs as expectations for a hawkish Fed next week dictated the state of play. The pair was provided a boost early on in the week as a weak Japanese GDP report marked the worst contraction since Q1 2009. Expectations for the Fed to alter their guidance at next week’s FOMC meeting then provided a bulk of the price action as the pair broke above both the 106.00 and 107.00 levels in the process amid favourable interest differential flows. More specifically, commentary this week has suggested that current market expectations for a rate hike is not aligned with the current stance of the Fed and therefore the reserve will use next week as an opportunity to try and shift participants understated expectations in line with their own. Looking ahead, naturally much of the focus next week will centre around events stateside with the FOMC rate decision amid a lack of tier 1 Japanese data.