EUR/USD
As has been the case throughout the week, today’s session saw an absence of tier 1 Eurozone data or economic commentary to guide the price action for the EUR/USD. Nonetheless, the pair was placed under immediate pressure amid a broadly stronger USD as the Dollar Index broke above the key 82.00 level to print its highest reading since Sep’13 following yesterday’s strong US data, and ahead of today’s FOMC minutes release. This alongside reserve manager selling subsequently saw the EUR/USD break through a knockout barrier at 1.3300, taking out stops below at 1.3295 (Nov'13 low) to reach lowest its lowest level since Sep'13. Thereafter, the pair continued to move lower amid the downward momentum in the EUR/GBP following the BoE minutes release. Looking ahead, attention for the Eurozone now turns towards tomorrow’s slew of PMI releases with the headline manufacturing releases for German, France and the Eurozone all expected to show a decline from the prior month.
GBP/USD
The key focal point for the pair today was on the BoE minutes release. Expectations were for the MPC to be unanimous in maintaining both their current interest rate and APF programme. However, outside bets of a 7-2 split on the interest rate decision were revealed to be successful upon the release, with Weale and McCafferty voting for a rate hike at this month’s rate decision. More specifically, Weale and McCafferty said it would be desirable to raise rates before wage pressures show due to monetary policy lags. Adding that an early rate rise would facilitate aim to ensure future rate rises are gradual. This saw an immediate fast-money move higher for the pair of around 50 pips before finding resistance at the 200DMA seen at 1.6674 as participants brought forward their expectations for a rate hike by the central bank. Thereafter, the pair traded in a relatively rangebound manner with a lack of fundamental catalyst’s to provide any further direction. Looking ahead, attention for the pair may reside stateside with a lack of tier 1 UK data due for release for the remainder of the week.
USD/JPY
As was the case for most major FX pairs the stronger USD provided much of the direction for the USD/JPY as the pair broke above the 103.00 handle during the Asia-Pacific session to trade at levels not seen since April. Overnight saw the release of the Japanese trade balance which revealed an unexpected widening of the deficit driven by a rebound in imports, however, this failed to provide the pair with any direction. The pair continued its overnight trend throughout the European session as participants look ahead towards today’s FOMC minutes release. In terms of the release, the market remains focused and sensitive to further clarity on when the Fed see rate lift-off although no big surprises are expected from the July minutes - markets are currently pricing in the first hike in July 2015.