EUR/USD
The pair finished the session higher, driven by a firmer the EUR/GBP cross and also option related flow after good size strikes expired at 1.3500 level. In terms of EU related commentary, ECB's Praet said that should interest rates be lowered to zero and that the ECB could still deploy quantitative measures, including buying government bonds, or injecting capital into banks; but added that “we are not at this point”. This was somewhat offset by comments by ECB’s Coene, who stated that he does not see the need for more rate cuts.
GBP/USD
Combination of macro-fund buying the EUR/GBP, together with comments from David Smith of the Sunday Times who said the Bank of England will not be lifting rates any time soon ensured that the pair underperformed its major counterpart and settled the session marginally lower. In terms of UK related commentary, Rightmove said that the average asking price for a home in the UK fell in the early weeks of November but the decline was smaller than usual for the time of year as demand continues to outstrip supply. In other news, Government borrowing is on course to fall by up to GBP 20bln below exp. handing Chancellor Osborne a major boost ahead of next month's Autumn Statement. This week the economic watchdog, the Office for Budget Responsibility (OBR) is this week expected to slash its forecasts for the year from GBP 120bln to GBP 100bln.
USD/JPY
The pair settled the session lower, on touted profit covering and also unfavourable interest rate differential flows after USTs gained amid short-covering after a round of receiving in 10y and 30y swap space. In terms of Japan specific commentary, Japan’s USD 1.2trl public pension fund should be remade as a new, independent entity, a panel tasked with proposing an overhaul of the fund are likely to recommend. The move could unleash a flood of cash into global markets and change the way trillions of JPY is invested. As a guide, a 1ppt move in the allocation to domestic stocks could send JPY 1.2trl into the market.