EUR/USD
The pair finished the London session relatively unchanged despite being weighed upon in the first half of the session by rhetoric from ECB’s Constancio. Constancio said financial markets misinterpreted the central bank and that they can still cut rates, implement QE or buy assets. This follows the recent ECB decision to keep rates on hold and not end their SMP sterilisation programme. As a result of these dovish comments, the pair drifted lower during the first half of the session with little else in the way of tier 1 data or economic commentary to act as a guide for price action. However, these earlier losses were then largely pared amid a weakening USD that stemmed from broad-based JPY strength. Looking ahead for the week, there is a distinct lack of tier 1 data from the Eurozone and therefore any commentary that adds to or goes against the grain of these comments from Constancio could provide the pair with further momentum.
GBP/USD
GBP/USD was seen lower in the first half of the European session amid an apparent accommodative stance from BoE governor Carney. Carney said that it would be best to adjust interest rates by more than 0.25% before reversing QE and that any QE unwinding would only take place after several rate increases. This shows a more accommodative stance from the central banker as fears of a an abrupt selling of gilt holdings were allayed as Carney reassured markets that any unwinding of QE would be a gradual one and thus saw a weakening of GBP. Elsewhere from the UK, today saw the release of UK Industrial Production, which did come in slightly below expectations, however this was offset by marginally better than expected Manufacturing Production and thus failed to add to the downward momentum for the pair. In a similar nature to that of EUR/USD, a weaker USD later in the session saw the pair retrace some of the earlier losses.
USD/JPY
As expected, the BoJ kept their monetary policy unchanged and retained its plan for a JPY 60trl-70trl annual rise in monetary base. However, The BoJ did cut its view on exports but upgraded its view on industrial production and capex. Nonetheless as a result of release not being outside the realms of expectation, the pair was not presented with a reaction and continued to trade above the 103.00 level. However, a flight to quality in the latter of half of the session amid fears of a further Chinese corporate default saw JPY drag the pair lower below the 103.00 handle. Looking ahead for the pair, this week sees the release of the BoJ minutes which could provide further colour on how the central bank views monetary policy in the lead up the April sales tax hike. Elsewhere, the week also sees a host of key release from the US including the weekly jobs data and thus direction for the pair may be heavily influenced by events in the US.