Talking Forex Daily Wrap - 22/10/13

EUR/USD
The pair printed a new high for 2013, breaking the high from Friday 1st February 2013, after a round of buy stops was triggered following the release of the delayed jobs report by the BLS. The release of the September jobs report is expected to lead to further USD weakness and thus ensure that the pair remains supported in spite of the fact that the ECB itself continues to remind market participants that it remains in an accommodative mode. In terms of EU related commentary, ECB's Coene said that a further drop in inflation might warrant policy action, before adding that it is too early to act now. Elsewhere, German government is to keep their growth forecast for 2013 at 0.5%, raise forecast for 2014 to 1.7% from 1.6%, according to a source.

GBP/USD
Similarly to the EUR/USD, the pair finished the session higher after the release of less than impressive NFP report resulted in broad based USD weakness. Separately, comments by BoE’s Bean also helped to ensure that the pair finished the session with solid gains. Of note, BoE’s Bean said that the Bank’s review may go as far as setting a new lower unemployment threshold, adding that if it appears that there is still a substantial degree of slack in the economy, which can be absorbed without threatening the achievement of the 2% inflation target in the medium term, then there will be scope to maintain the existing stance. Going forward, market participants will get to digest the release of the most recent policy meeting minutes on Wednesday morning.

USD/JPY
The pair reversed the initial weakness following the release of the delayed NFP report and edged back towards key technical levels (100 and 50DMA levels) after broad based EUR strength saw EUR/JPY break above 135.00 level to hit its highest level since November 2009. In terms of Japan specific commentary, analysts at Barclays cut Japan Q3 GDP forecast to an annual rate of +0.3% from +2.2% citing sluggish Japan consumption and exports.