USD/JPY bounces, EUR pares gains made post-ECJ ruling on QE

Posted On 15 Jan 2015
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USD/JPY saw more bounce in Asia following moves down yesterday. Paring of positions by weak longs fuelled the move down with some specs jumping on the bandwagon, especially after weak US retail sales data and easier still US yields. A wholesale reversal was seen after USD/JPY traded down to 116.07. Already having bounced quite a bit into New York’s close, it traded up more from 117.14 to 117.85 alongside the Nikkei index and almost matching yesterday’s pre-plunge 117.95 high. EUR/JPY grinded up from 138.15 to 138.78 and GBP/JPY from 178.35 to 179.51 after fresh trend lows yesterday.

EUR/USD opened in Asia at 1.1789 after whipsaw trading overnight. Asia proved much calmer with the focus more on AUD and JPY. EUR/USD saw a tight 1.1772-92 range. EUR/JPY saw a bit of action with short-covering continuing after the plunge yesterday. The ECJ ruling to allow the ECB to buy sovereign bonds has kept alive expectations of full-blown ECB QE at the January 22 meeting, and looks to continue to weigh despite falling US yields on the dovish turn in Fed expectations. Some suggest EUR/USD could rally post-ECB and Greek elections in classic sell-the-rumor/buy-the-act fashion.

GBP/USD remained modestly bid following whipsaw action overnight, trading 1.5230-45 in Asia. The urge seems to make tracks away from the 1.5077 spike low on Tuesday. EUR/GBP remained better offered between 0.7726-40 and levels not seen since October ’08 following the ECJ’s court ruling approving ECB QE.

USD/CHF did little, treading water between 1.0184-1.0200 after whipsaw action overnight. EUR/CHF did not move, holding at 1.2009-10 on an indomitable SNB.

AUD/USD opened in Asia at 0.8148. The writing should have been on the wall for AUD bears after Wednesday’s sharp short covering rally from the late Asia/early London low of 0.8068 to 0.8180 in New York – despite the horrendous slide in copper. Aussie jobs data pulled another rabbit out of the hat, sending AUD/USD flying up from its early low of 0.8134 to 0.8222. The data seems to have killed off any chance of a February rate cut and paring of CPI forecasts despite recently shifting expectations.

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