EUR/USD
Overnight, the pair was largely guided by fluctuations in the USD index with a lack of fresh economic commentary from the Eurozone to provide the pair with any further direction. The main focus for the Eurozone today was on the German ZEW survey, which came in relatively mixed with the headline expectations figure slightly exceeding consensus, although this was met with a disappointing current situations figure, as such EUR/USD failed to see a sustained reaction. Elsewhere, EUR was provided some reprieve amid the weaker GBP which saw EUR/GBP advance towards the 0.8000 handle and thus pull away from a USD 2.1bln option expiry at 0.7975. Looking ahead, attention for the Eurozone turns towards tomorrow’s CPI release, albeit final, while markets are also expected to remain tentative ahead of tomorrow’s FOMC rate decision.
GBP/USD
Once again, the key focus for the pair was placed on the uncertainty regarding the Scottish independence referendum. Today also saw the UK inflation report, ahead of which participants dragged the pair lower amid fears of a lower than expected figure, however, both the CPI and RPI readings came largely in line and thus provided the pair with a modest relief rally. Thereafter, attention returned to the Scottish vote, with GBP/USD seeing a minor uptick upon news that UK firm Betfair had already paid out on bets going for a ‘no’ vote. Following this, the pair then traded in a relatively rangebound manner as participants await upcoming key risk events. From a UK perspective, attention tomorrow will be placed on the BoE minutes release, which is once again expected to reveal a 7-2 split in favour of keeping rates on hold with concerns regarding Scotland and recent weak data believed to be enough to ensure that no other MPC members followed suit with Weale and McCafferty.
USD/JPY
Overnight, participants continued to trim USD longs ahead of the FOMC rate decision, thus supporting major USD pairs, with USD/JPY briefly breaking below the 107.00 handle for the first time this week. Today’s session saw BoJ governor Kuroda on the wires, although his comments failed to provide the pair with any further direction with USD/JPY trading in a relatively rangebound manner throughout the session. In terms of investment bank commentary JPMorgan cut their JPY forecasts on overseas investment outflows from Japanese investors and raised their USD/JPY forecast from 106 to 109 for Q4, and from 107 to 109 for Q2 2015. Looking ahead, all eyes for the pair will be firmly placed on the FOMC rate decision and what/if any changes will be made to the Fed’s forward guidance.