All eyes on Federal Reserve

USD/JPY and the JPY crosses were mostly better bid in Asia. Factors cited included rather buoyant Nikkei despite the Wall Street plunge, bounce in US yields, renewed concerns over Greek debt/Grexit, the surprise shift in MAS policy band which lifted USD/SGD (effects felt in USD/JPY too) and short-covering. The Nikkei did better on continuing Japanese pension fund allocations out of domestic bonds and into stocks. USD/JPY traded up from 117.72 through offers ahead of 118.00 to 118.07 initially. Japanese exporter sales (spot date month-end) pushed it back below 118.00 briefly before a fresh push up to 118.28. Trading since has been in the 117.98-118.23 hourly Ichimoku cloud. EUR/JPY faded a bit from an early high of 134.24 to 133.70 but remained well above the 132.51 low in late Asia yesterday. GBP/JPY see-sawed between 178.62-179.21, better bid later than earlier. AUD/JPY soared from 93.18 ahead of the Aussie CPI release to 94.44 post with core inflation surprisingly high. NZD/JPY saw a blip up in sympathy from 87.57 to 88.4.

EUR/USD opened in Asia at 1.1380 after broad EUR strength overnight on short covering. Up marginally more to 1.1384 early, it tracked lower thereafter on broad USD strength as highlighted by USD/JPY and USD/SGD moves. Talk that the Fed was unlikely to infuse a dovish slant in their statement helped. A low of 1.3330 was seen before the market steadied. Bids are eyed ahead of 1.3300.

GBP/USD fell back in sympathy with EUR/USD from 1.5196 to 1.5155. EUR/GBP traded soggy, off modestly from 0.7489 to 0.7474.

USD/CHF was better bid alongside USD/JPY, up modestly from 0.8987 to 0.9055. EUR/CHF saw nervous consolidation between 1.0205-71. Talk of intervention in both pairs yesterday remained supportive.

AUD/USD opened in Asia at 0.7937 after trading firm overnight on broad USD weakness following weaker US economic data. Down a notch to 0.7900 early following the surprise MAS move to lower its NEER slope (viewed as a form of easing), it popped to 0.8010 with underlying inflation was hotter than expected. OIS was pricing in a 40% chance of a RBA ease before the data. It fell below 10% in the aftermath. AUD looks to remain relatively well bid on the crosses whatever happens to AUD/USD post-FOMC.

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