Global FX: EUR/USD Trips Stops

EUR/USD
The early Asia-Pacific session saw very little action in the pair, hovering around the 1.3900 level. Until late in the Asian-Pacific session when EUR/USD tripped stops through yesterday’s high near the 1.3915 level. This spike in volumes sent the pair to 1.3967, highest since late October 2011. Further supporting EUR/USD were the successful bond auctions from both the Italian and the Irish debt agencies. This was partially retraced in the European afternoon as the USD clawed back losses as US equities turned red. Data tomorrow of German CPI and EU’s debt rating by Moody’s will likely be second to the eagerly awaited Crimean referendum on Sunday and the geopolitical reaction to the result.

GBP/USD
The currency pair pulled back some of the week's sharp losses today, briefly reclaiming the 1.67 handle after Carney-inspired losses earlier in the week. In front of the Treasury Select Committee, Carney highlighted that there remains significant slack in the UK economy that requires filling before the MPC can consider an adjustment to the bank rate. Despite this, Carney ensured that the BoE would refrain from shedding Gilts on the way through tightening policy. As such, the pair is still significantly below Monday's best levels, with analysts taking a more and more bearish slant on the pair as the EUR/GBP cross continues to press higher. Tomorrow's session sees further key risk events, with the previously delayed UK trade balance due at 0930GMT.

USD/JPY
After 2 days of trickling lower in USD/JPY the trend was unbroken today with USD/JPY falling to 7 session lows. In the Asia-Pacific session USD/JPY moved in tandem with the sporadic peaking in the Nikkei 225 supported by an increase in risk appetite. However the pair fell after a surprising announcement from the BoJ of a decrease in their purchases of long term maturities. Exacerbated by weaker than expected Chinese data with the pair reaching lows of 102.42 early this morning. These drops were later pared in the early European session as markets took profit on the fall and price action stalled. Upon the Wall Street opening bell, markets rushed for safe havens as US equities fell subject to technical selling, lifting the JPY. Tomorrow’s movement will likely be in part dictated by the US University of Michigan Confidence at 1355GMT.