Global FX: Yen-Dollar Weakness Dominates

The pair finished the London session in positive territory following strength observed in early trade on reports of offers filled by Swiss names, which saw EUR/USD top the 1.3500 level. This level was then held by a host of better than expected services PMI releases from various euro-zone countries. In terms of macroeconomic data, perhaps the most significant release of the day was that of German Factory Orders which came in at 3.3% vs. Exp. 0.5% and this lead to further gains for EUR amid a weaker USD ahead of this weeks key risk events including US GDP, Nonfarm Payrolls and Unemployment Rate. In afternoon trade, EUR saw further gains, following market talk that Market talk from ECB sources that a ECB rate change is unlikely even amid inflation dip. Looking ahead for the pair, as has been mentioned previously, the main source of focus for market participants will be on tomorrow’s ECB decision. Although, the general consensus is for the ECB to maintain rates, a dovish statement by the ECB tomorrow could provide some guidance for price action. From a technical perspective, EUR/USD is now trading above the 50-DMA seen at 1.3493.

GBP/USD
As was the case for EUR/USD, USD weakness was a catalyst behind price action for GBP/USD today which saw the pair finish the day in positive territory. The USD weakness was exacerbated as yet another set of strong UK data was released with UK Industrial & Manufacturing production topping expectations and thus helped to contribute to the recent bid-tone for GBP. Looking ahead for the pair, tomorrow sees the announcement of the BoE rate decision, although there is little in the way of expectations of a shift in policy by the BoE, it will nevertheless be a source of focus for market participants. With regards to technicals, the pair are now currently trading just above the 30-DMA seen at 1.6081.

USD/JPY
In comparison to EUR/USD and GBP/USD, USD weakness was met by JPY weakness following the Toyota revising their growth forecast to JPY 2.2trl. This news saw a rally in the Nikkei 225 and consequently a fall in JPY strength, which counteracted the recent weakness observed in USD. Overnight also saw the release of the BoJ minutes, however there was nothing out of line with expectations and thus there was little in the way of a market reaction. Looking ahead for the pair, there is little in the way of key economic data for Japan. However, as mentioned above, the key risk events are those coming from the US in the form of GDP, Nonfarm Payrolls and Unemployment rate. In terms of technicals, the 50-DMA and 100-DMA are in close proximity with the 50-DMA just crossing below the 100-DMA in recent trade following the recent weakness seen in JPY.