EUR/USD
The pair saw a relatively mundane start to the session after hovering around the 1.3400 before eventually breaking below this level after taking out a touted option barrier and succumbing to the broad-based USD strength to print it’s lowest level since November 2013. The main data focus for the Eurozone today stemmed from the German CPI report. German state CPIs painted a relatively mixed picture of the nation’s inflation levels before the main figure at 1300BST proved to be broadly in-line with expectations and thus failed to provide the pair with any further direction. Thereafter, US data releases took centre stage with the ADP employment change first up on the schedule. The release fell short of expectations (218k vs. Exp. 230k) but was not far enough out of line to provide the pair with any traction. However, the US GDP release far-exceeded expectations and saw US growth stage a huge turn-around from previous quarter (4.0% vs. Exp. 3.0% Prev. -2.9%). This subsequently saw the pair rapidly extend its losses in a fast-money move of around 30 pips with the report also bolstered by consumer spending on durable goods rising 14%, the most since 2009. Looking ahead, focus lies on the FOMC rate decision, ahead of which Goldman Sachs have added to their short position for the pair.
GBP/USD
Today resulted in yet another day of losses for the pair with the GBP/USD on the backfoot from the get-go as opinion remains rife that the pair is over-valued; a view shared by the IMF. The broad-based USD strength subsequently out-muscled GBP and thus led the pair lower with an absence of tier 1 data from the UK or economic commentary to support the pair. The misery for the GBP/USD was then further compounded by the particularly strong US GDP report which cemented the pair’s position in negative territory heading into the European close. Looking ahead, tomorrow once again sees an absence of tier 1 UK releases and thus price action could be further determined by the continued sell-off or events stateside with the FOMC rate decision due after-market.
USD/JPY
Overnight, the pair remained above the 102.00 level and above the 100 and 200DMAs seen at 102.04 and 102.13 respectively alongside the stronger USD. During the first half of the European session, the pair traded in a relatively tight-range as participants awaited the session’s key US data releases. As was the case against all other major USD pairs, USD surged higher against the JPY alongside the move lower in USTs which saw the pair prosper from favourable interest differential flows. Thereafter, the USD/JPY continued to extend on gains after tripping stops at 102.50 as the pair looked to test its June high at 102.80, with attention towards the end of the EU session turning towards the FOMC release later. Looking ahead, as can be expected the FOMC release will be a key focus, while BoJ’s Kiuchi is due on the speaker slate overnight.