Global FX: U.S. Uncertainty Ripples Through Currencies
Talking Forex | Oct 03, 2013 12:01PM ET
EUR/USD traded higher for the entirety of the session as EUR benefited from hawkish comments by ECB’s Noyer. While yesterday’s post-rate decision press conference offered nothing concrete in terms of a response to increased money market rates and continually contracting private-sector lending, Noyer went further, stating that a new LTRO in which markets saw as a potential answer, was in fact unnecessary. Later in the session EUR/USD saw further support as analysts at Credit Suisse saw EUR/USD reaching 1.40 in the near term as markets begin to focus on debt ceiling concerns in the US.
GBP/USD
GBP/USD saw downside despite the USD index seeing weakness as continued uncertainty surrounded the US budget impasse. EUR/GBP saw the greatest proportional move in response to the aforementioned hawkish comments from the ECB, which translated into GBP weakness across the board. The increase pace of downside for GBP saw the cross break through its 21-DMA which dragged GBP/USD through the 1.6200 handle to the downside with weakness attributed to model fund selling.
USD/JPY
USD/JPY saw upside in early trade today as sentiment was lifted by Chinese non-manufacturing PMI, which beat expectations. Despite all other Asia-pacific equity indices trading positively, Japanese stocks remained flat as participants continued to weigh the negative effect of the sales tax hike against the positive effect of the JPY 5tln stimulus package. This had the effect of capping the upside for USD/JPY. Later in the session the USD saw further losses and USD/JPY turned negative as Credit Suisse were saw downside in the pair in the near term, anticipating a touch upon the 95.00 level as the US debt ceiling draws focus from participants.
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