GBP/USD
GBP/USD saw a further bout of weakness overnight, albeit not as extreme as yesterday, after the latest TNS poll revealed that support for independence has jumped by six points in the last month, putting the “yes” vote at 38% and the “no” vote at 39%. However, the pair then began to pull off these lows in early European trade ahead of the UK’s key data releases today. Industrial production exceeded expectations, although GBP/USD proved to be relatively unreactive to these figures. Thereafter, attention turned towards BoE Governor Carney’s appearance at the TUC conference, where it was expected the central banker would address current UK wage growth. However, the main headline from his speech was that a rate rise by spring 2015 is consistent with the BoE’s goal. This saw GBP/USD move higher by just shy of 30 pips and help pare earlier losses with a lack of newsflow thereafter to dictate price action. Looking ahead, attention now turns to tomorrow’s appearance by Carney at the Treasury Select Committee hearing, where he will have to explain the BoE’s findings in the latest quarterly inflation report.
EUR/USD
EUR fell victim to further broad-based USD strength overnight as EUR continued its move back below the psychological 1.2900 handle to trade at its lowest level in 14 months. With a lack of pertinent economic commentary or tier 1 data from the Eurozone, the pair traded in a relatively rangebound manner for the remainder of the session. Tomorrow once again sees an absence of tier 1 Eurozone data with attention turning towards any comments made by ECB’s Praet who is due to speak twice tomorrow. However, with the light Eurozone calendar it’s possible that the pair may continue to be dictated by the USD index or any further GBP fluctuations.
USD/JPY
USD/JPY was a key focus for participants throughout the session as the pair extended its gains above 106.00 amid broad-based USD strength, with the pair printing its highest level since October 2008. USD strength was also exacerbated by the move lower in USTs ahead of this week’s supply from the US, with the US coming to market with their 3,10,30yr offerings. Further upside for the pair was also attributed to the recent purchase of Ebates by Japan's Rakuten for USD 1bln in cash. Thereafter, the move to the upside was capped as USD/JPY ran into offers around the 106.40-50 level, with a lack of fundamental newsflow to dictate price action for the remainder of the session. Looking ahead, attention turns towards any comments from BoJ Deputy Governor Iwata, although price action for the pair may continue to be dictated by movements in the US Dollar Index.