USD Weakness Weighs On Global FX

The pair finished the session in minor positive territory, after prepared comments by Fed’s Bernanke weighed on the USD and prompted broad based risk on trade. Of note, Fed's Bernanke said that pace of bond purchases not 'on a preset course' and that he sees highly accommodative policy in foreseeable future. In terms of EU related commentary, German press reports of a EUR 10bln financing gap in Greece were denied by a European Commission spokesperson, who also said that the programme is fully funded for the next. Furthermore, any subsequent gap in the funding of the programme for Greece will be addressed in due course on the basis of facts not speculation. Elsewhere, it was reported that Spain’s opposition Socialists have threatened to call a formal motion of censure against the government of Mariano Rajoy, piling fresh political pressure on the Spanish leader over a slush-fund scandal that has rocked the ruling Popular party.

GBP/USD
Less-dovish-than-expected minutes from the most recent BoE policy meeting, as well as broad-based USD weakness following Bernanke’s semi-annual testimony ensured that the pair finished the session with gains of over 100pips. Of note, the minutes revealed a unanimous vote to keep both the APF and the benchmark rate unchanged, as well as refrain from committing to implementing forward guidance. The release noted that while discussion will have important bearing on August 1st decision but "no presumption" there will be a change in policy. In turn, this unwillingness to commit to forward guidance meant that expectations of an announcement as early as August had to be scaled back somewhat, resulting in steeping of the UK curve and broad based GBP strength.

USD/JPY
The pair finished the session lower, amid broad-based USD weakness following comments by Bernanke at his semi-annual testimony. In terms of Japan specific commentary, BoJ Minutes from the June 10th-11th meeting stated that Japan's economy is to return to a moderate recovery path. The minutes also stated that some members said extending longer-term funds via market operations could restrain excessive interest rate fluctuations and could be misinterpreted as change in monetary policy framework.