EUR – Closed in NY Wednesday at $1.2844 after rate had recovered off intraday lows of $1.2790 to $1.2864 before settling back into the close. Rate eased to $1.2841 into early Asia before it edged to highs of $1.2854, settling through the mid part of the overnight session between $1.2840/50 with trade in this pair basically sidelined ahead of the much awaited BOJ announcement, with the ECB rate decision/Draghi press conference in the background. Euro-dollar dropped from $1.2850 to $1.2834 on the BOJ announcement, as dollar-yen prompted a general demand for dollar’s as this rate spiked from below Y93.00 (reaching Y95.68 into Europe). Euro-dollar recovered, meeting resistance at the morning base of $1.2840. Rate extended recovery to $1.2844 in early Europe before turning lower again, the move down again influenced by dollar-yen’s extended rise, with the release of weaker than flash forecast services PMI’s in the major EZ economies taking it on to lows of $1.2783 after stops were triggered through $1.2790. Recovery efforts faltered ahead of $1.2800 though remained buoyed above $1.2780. Focus turns to ECB rate decision/Draghi press conference at 1145GMT/1230GMT, with US weekly jobless claims also an influence.
GBP – Closed in NY Wednesday at $1.5131 after rate had been pulled to recovery highs of $1.5159, from earlier lows of $1.5075, as the rate trailed euro-dollar’s stronger rally. Euro-sterling reflected this as it edged up to NY highs of stg0.8491, though again was seen meeting decent resistance ahead of stg0.8500. Cable edged back to $1.5144 in Asia before it drifted off to retest late NY pullback lows around $1.5126. Rate settled between $1.52130/40 ahead of the BOJ policy announcement. Dollar-yen raced higher as the details of the new BOJ policy were announced, which in turn prompted a round of general dollar demand which weighed back on cable, taking rate to fresh overnight lows of $1.5107 into the European open. Cable remained under pressure in early Europe, as spec longs pared positions ahead of today’s services PMI data and the BOE rate decision. Stops were triggered on the break of $1.5070, then through $1.5050, as rate touched an extended low of $1.5034. Move was seen in tandem with euro-sterling breaking to stg0.8521. Sterling pared losses ahead of PMI, jumping to $1.5082 from $1.5066 on better than forecast release, the cross breaking down to stg0.8480. No change rates/QE expected at the BOE announcement.
JPY – The anticipated release of BOJ policy announcement prompted strong selling of yen. Dollar-yen dipped back to Y92.74 to retest the area of NY lows at Y92.72 as market positioned for a weak Nikkei opening. CTA and fix demand lifted rate off the early lows back above Y93, with a late dip to Y92.78 quickly reversed as the BOJ announced policy to boost an asset purchase programme and meet a 2% inflation target in two years. Rate raced back above Y93.00, triggered stops on move to Y93.84, with a second wave of demand lifting Y94.23. Euro-yen was taken from Y119.37 pre announcement to Y120.90, with rate finding support around Y120.65 on initial corrective pullbacks. Risk appetite continued into Europe as traders digested the policy announcement, dollar-yen quickly lifted through Y95.50, euro-yen through Y122.00 flushing more stops on the move. Profit take sales pared light gains, before fresh demand from real money extended to highs of Y95.68/Y122.69, further comments from Kuroda in his press conference also attributed to the move. Dollar-yen later eased to Y95.40, euro-yen to Y122.10 ahead of the ECB rate decision.
EasyForexNews Research Team