Overview
Overnight, JPY enjoyed a relief rally after the BoJ refrained from engaging in further accommodative policy, keeping its annual monetary base rise unchanged at JPY 80trl. Notably, the decision was uncharacteristically late, in sharp contrast to the October meeting, in which the Japanese central bank surprised markets with more QE, subsequently increasing the magnitude of today’s dovish unwind.
In terms of today’s session, focus has centred on weakness seen in the USD-index which has supported major pairs, with gains in GBP/USD boosted by the prospect of Shell (LONDON:RDSa) converting a substantial amount of its USD-denominated debt into GBP in order to complete their purchase of BG Group (LONDON:BG). On a technical note, GBP/USD broke back above yesterday's afternoon high of 1.4921 and continued its trend towards the key 1.5000 level. As such, GBP outperformed its FX peers and led EUR/GBP close to breaching 0.7250 to the downside, while EUR/USD endured some selling pressure heading towards the European close after the pair tripped stops through 1.0840 amid no specific fundamental news. Of note, the move coincided with the 10am NY cut which saw several large options expire in EUR/USD at 1.0825-35 (600mln) and 1.0900 (543mln). The move coin Attention now turns to the FOMC’s March 17-18 meeting minutes release, however this could see a muted reaction due to the back-dated nature of the event. Furthermore, some analysts expect the statement to be a reiteration of the dovish comments that followed the removal of “patience” from the Fed’s forward guidance.
Looking ahead, tomorrow sees BoE rate decision, US Initial and Continuing Jobless Claims. Furthermore, Greek Finance Minister Varoufakis is scheduled to speak at an economic conference after today’s meeting between Greek PM Tsipras and Russian President Putin.