EUR/USD opened in Asian on Wednesday at 1.2545 after trading in a range held in Tuesday’s European and US session. It appeared that investors were unwilling to enter large positions ahead of a key risk event – the European Central Bank meeting on Thursday. Adding support to the euro was a news report by Reuters which said that Eurozone national central bankers plan to challenge ECB chief Mario Draghi at the ECB meeting, which means this rift between central bankers and the ECB could delay any further monetary stimulus measures. The ECB will have a harder time getting to QE as there would be a hurdle to further ECB easing.
USD/JPY opened in Asia at 113.58 after trading a tight range in the US session. Yen weakened considerably since Friday’s surprise move by the Japanese central bank to further loosen monetary policy. Even a poor US Trade report failed to have a lasting negative impact. However the 114.00 yen level proved to be a strong resistance level.
GBP/USD is testing the key 1.6000 level. After hitting a European high of 1.6008, the pair fell to 1.5977 in a knee-jerk reaction after the disclosure of October’s worse than expected UK construction PMI, which came in at a 5 month low of 61.4 compared to the 63.5 forecast. Wednesday’s UK services PMI should provide further clues as to the health of the UK economy. A reading above forecast may help push the pound above resistance at recent highs of 1.6040.
USD/CHF breached the Oct 6 high, but then failed to even get above 0.9700. The general risk-off theme of the day was more concentrated in Europe markets.
AUD/USD mostly consolidated on Tuesday and the ticked up slightly at the Asian open today. The pair traded between a 0.8710/50 range yesterday as the mixed economic signals from Australia and a benign RBA gave no catalyst to drive the pair majorly in either direction. Thursday’s Australian October jobs report will be key.
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