Quiet session overall, but CAD weakness seen on further oil price dip. JPY sales losing momentum on risk sentiment. GBP spike on Weale comments easily contained
An extremely cautious session in FX, with some early focus on the GBP pairs and the JPY. GBP/JPY was also in the limelight courtesy of the Softbank (T:9984)/ARM Holdings (NASDAQ:ARMH) takeover reports, but the lack of follow-through suggest much of this may already have been hedged out. GBP received a bid nevertheless, as the BoE’s Weale said wages and growth argued against a rate cut, despite other members alluding to a move in August. 1.3300 held well in the cable run higher, with EUR/GBP also well contained in the low .8300s. Part of this will have come from pre 1.1000 support in EUR/USD, with the prospect of an on-hold ECB later this week put the market on alert for another sharp upturn into the 1.1100s. For USD/JPY, stimulus hopes should see the lead spot rate bought up on dips, and with the events in Turkey having been ‘dealt with’, the subsequent calm has seen the market cushioned well ahead of the mid 104.00s seen late Friday. The CAD stole the limelight late in the day, with struggling oil prices weighed by talk on the Genscape report, as sources eventually cited a 26.5k build. Taking out modest resistance around 1.2980-85, we then went on to trip more stops through 1.3000, where the pair is still looking to build on gains – 1.3050-60 the next area to watch for on the topside. AUD is also looking soft on the weakness in energy; the RBA minutes in Tuesday’s overnight session an added near term weight. NZD losses seem to have run out of steam, with the pair recovering from circa .7070 and holding tight on .7100 as risk sentiment faltered on the Wall St open.