Talking Fx: Yen Strength Hits Other Pairs

EUR/USD
In a continuation of the move seen yesterday EUR continued to gain strength through the session, with the move being led again by USD weakness. After yesterday decline for the S&P 500, the biggest since January and the third consecutive daily, the USD downside move was exacerbated as a flight to quality and the unwinding of positions left from last week’s risk events led away from the US currency. This negative sentiment was continued through the European open with EUR/USD moving to set a fresh high for the session at 1.3808, its highest since April 3 and above last Friday’s post-payroll spike, as the downplaying of QE, after last week’s heavy news flow regarding the monetary tool, also helped give EUR strength. Looking ahead, todays US session looks to be light in price moving events, however tomorrow participants get to experience the release of the FOMC minutes at 1900BST.

GBP/USD
In similar circumstance to its peers EUR/USD, GBP’s upside move has been a consequence of the weakening USD, although some tier 1 UK data helped support price action. GBP/USD traded in the green from the get-go, breaking the psychological levels of 1.6650 and 1.6700. The second of these levels whilst in the process of a 32 pip rise brought about by positive UK data, in the form of manufacturing and industrial production, which firmly beat expectations. Later in the week the market will digest the BoE rate decision, on Thursday at 1200BST.

USD/JPY
The pair has seen JPY strength rather than the USD weakness currently affecting the other major pairs. Overnight BoJ rate decision, kept the same, and monetary policy statement, which made no mention of an expansion to QQE, led the currency to break through the daily low for April 7th, the daily Kijun-sen and daily high for March 27th to test the 102.10 handle. As the European session aged words from BoJ Governor Kuroda regarding a QQE exit, and about the tools the BoJ had at its disposal, added weight to the downward trend in USD/JPY, further lifting the European currencies. Looking at the rest of the week, we see the BoJ releasing the minuets from its March meeting on Friday and US weekly jobs reports on Thursday as opportunities of participants.