Talking Forex: USD/JPY Fell Throughout Trade

EUR/USD

The pair finished the session in positive territory amid broad based USD weakness stemming from option related flows and profit taking in the USD/JPY. In terms of EUR specific commentary, today saw the Eurozone PPI reading for October which came in softer than expected, but failed to inspire any EUR weakness as the area’s low inflation has already been observed via the more closely followed CPI releases. Later on in the session, there was market talk of dovish think-tank report on ECB, with the report suggesting that a negative inflation reading in Q1 2014 would mean additional ECB measures could be introduced. However, due to the longer-term nature of the comments, market participants did not provide the EUR/USD with much in the way of a market reaction. Looking ahead for the pair, markets will be putting their attention on this Thursday’s ECB rate decision and accompanying press conference, which could provide some rhetoric on the next steps in ECB policy.

GBP/USD

The GBP/USD settled higher following the release of the better than expected UK PMI Construction reading for November which came in at 62.6 vs Exp. 59.0 and marked the highest reading for the release since August 2007. This in combination with the weak USD today saw the pair head towards the 2013 highs seen yesterday at 1.6443 as it traded above the 1.6400 level. Market participants will be looking ahead to this weeks Autumn report, which is expected to see a positive outlook for the UK. This week does also see the BoE rate decision, however, this is expected to offer little in the way of a market reaction as the UK economy is still short of where the BoE wishes it to be before it considers a rate hike.

USD/JPY

The USD/JPY fell throughout trade today amid broad based USD weakness, as well as the fact that market was left with JPY shorts to cover the erasure of RKO barriers at 103.25 overnight, while the EUR/JPY also failed to consolidate above 140.00 level. The session was very much more focused on technical rather than fundamentals with little in the way of macroeconomic data or commentary from Japan. However, towards the end of the week, there may be more of a shift towards fundamentals with the release of US Nonfarm Payrolls on Friday. From a technical perspective, given today’s downside in the USD/JPY, the 50DMA and 100DMA may be closely followed by market participants as there is a possibility that the 50 could cross back below the 100 if this downward momentum continues.