Talking FX: EUR/USD Traded In Negative Territory

EUR/USD
The pair traded in negative territory despite trading relatively unchanged throughout most of the session. Overnight, USD strength was observed during the Asia-Pacific session after AUD came under pressure following a weaker than expected GDP reading. However, EUR did regain some territory following various PMI Services releases from the Eurozone including the Spanish reading which showed the strongest growth since June 2010. The biggest news for the pair came later in the session, with USD benefiting from the ADP Employment reading which came in at 215K vs. Exp. 170K. Looking ahead for the pair tomorrow sees the ECB rate decision and on Friday there is the release of Nonfarm payrolls which could play an even more crucial role than usual given the ADP figure today, which was followed by comments from Moody's Chief Economist Zandi saying if job growth in next several months remains consistent, it would be a green light for Fed to begin tapering QE.

GBP/USD
Despite the recent string of positive data releases from the UK, today’s PMI services release came in at 60.0 vs Exp. 62.0, leading to a fall of around 33 pips which caused GBP to be one of the underperformers for the session. This weakness was then exacerbated by the significantly better than expected ADP reading ahead of Friday’s Nonfarm Payrolls release. In terms of economic commentary for the UK, S&P's Kraemer says if analysis shows recent strong UK growth sustainable then the agency could taking rating action. The pair traded in a relatively tight range throughout the afternoon as market participants look ahead to tomorrow’s Autumn statement from UK Chancellor of the Exchequer Osborne, which is expected to echo the positive sentiment surrounding the UK.

USD/JPY
The pair finished the session relatively unchanged after the USD/JPY traded range-bound following its dip back below the 103.00 level yesterday. There was little in the way of macroeconomic data from Japan to act as a guide for price action and the releases from the US today failed to break the USD/JPY out of its range. It is worth noting that technical support for the pair can be found at 102.00 with large stops touted at 101.90 and a huge digital option expiry at 103.25 tomorrow, although the USD/JPY is currently trading well below this level. Looking ahead for the pair as already mentioned throughout the week the focus is very much on Friday’s Nonfarm payrolls release, with market participants attempting to predict when the Fed will alter their tapering program.