EUR – Closed Wednesday’s NY session at $1.3183 having bounced off initial FOMC react lows of $1.3169 to $1.3224 before drifting off into the close. Rate touched an early high at $1.3190 in Asian trade before continuing its drift lower, the rate stepping to an overnight low of $1.3166 before edging back above $1.3170 into Europe. Fed FOMC provided no real surprises, though some read into the text that they have left the door open for more QE. Focus has since shifted to the ECB rate decision at 1145GMT with a majority of market forecasters expecting a cut in the refi rate by 25bps. If this occurs the deposit rate is expected to remain at zero while the lending rate is expected to move down by between 25-50bps. Unchanged rates likely to cause more initial react. Analysts attention on what Draghi will announce as regards lending to SME’s, noting that action could the place euro back in favour. Euro-dollar came under further pressure into Europe, the move below $1.3160 taking it to extended lows of $1.3147, with initial recovery attempts meeting semi official supply at $1.3160/65. Slight strengthening in EZ mfg PMI’s allowed rate to lift to $1.3174 but positioning ahead of ECB countered.
GBP – Closed in NY Wednesday at $1.5558 after rate had bounced off an initial FOMC react low of $1.5557 to $1.5607 (50% $1.6381-1.4832 2013 range), the move taking out barrier interest at the figure before it eased to $1.5550 then edged higher into the close. This recovery continued into Asia, the rate moving to $1.5572 before turning lower in tandem with euro-dollar, stepping its way to lows of $1.5542 and was holding heavy into Europe. Euro-sterling was contained within a tight stg0.8463/73 range through Asia after rate had extended its recovery Wednesday to stg0.8498, traders earlier in the session saying that they would look to fade rallies toward the stg0.8500/10 area. Domestic interest was on UK construction PMI data, the strong release taking the rate to extended highs of $1.5580, but reported offers at $1.5580/85 countered any follow through gains. Sterling retained a firm tone through the balance of the European morning, the cross able to extend its corrective pullback to stg0.84495, but was holding off best levels ahead of ECB/NY open.
JPY – Closed in NY Wednesday at Y97.41, having bounced between Y97.07-54 following the FOMC announcement, with the Y97.00 area continuing to keep rate buoyed. Rate was pressed down to Y97.09 in early Asian trade, dealers noting that main sell weight seen on the back of euro-yen fund sales. Asian reserve demand was again noted ahead of the Y97.00 level as the pair recovered to Y97.42, later easing to Y97.20. Euro-yen tracked the dollar to highs of Y128.39, before settling around Y128.10. The yen pairs had a very quiet European session as focus turns to the ECB rate decision where many now believe a cut in rates is expected. Dollar-yen was tied to a narrow Y97.14-35 range with strong Asian sovereign demand seen into Y97.00, a break triggers stops, more from CTA’s through Y96.90. Euro-yen opened heavy and slipped to Y127.76, dip demand cushioned, before the rate tracked euro-dollar’s extended recovery to settle around Y127.90. Well received mfg PMI data across the eurozone boosted sentiment as the cross lifted to Y128.16, later easing to consolidate above Y128.00.