USD/JPY slips as risk aversion remains, ECB in focus

USD/JPY edged lower in Asia, falling from 117.67 to 116.92. Risk aversion was still one as investors are still fearful of after-shocks from the SNB move and really in no hurry to reestablish positions ahead of key risk events – the Bank of Japan and ECB policy announcements on Wednesday and Thursday. EUR/JPY traded similarly between 135.17-136.06 with the bias still very much down.

EUR/USD opened in Asia at 1.1530 after closing Friday in New York at 1.1569. The gap lower was due to weekend reports that Syriza was increasing its lead in Greek polls and the Der Spiegel piece indicating ECB President Mario Draghi and German Chancellor Angela Merkel may have come up with a compromise plan for ECB quantitative easing. The gap lower was quickly filled and EUR/USD traded back to 1.1575 before EUR/JPY weakness helped it back down. The market looks to have completely priced in ECB QE with the only question now the size of the bond-buying program.

GBP/USD see-sawed between 1.5120-62 in thin, directionless Asian trading. EUR/GBP also consolidated between 0.7630-44 after the plunge to 0.7596 Friday.

USD/CHF was rose from 0.8581 to 0.8690 in thin Asia trading. Some semblance of quiet has returned though many remain poised for more after-shocks. EUR/CHF rose from 0.9919 to 1.0043 on little volume in an effort to retrace even a small portion of the losses seen last week.

AUD/USD opened in Asia at 0.8220 after to-fro action Friday. Bid early in Asia, it traded to 0.8244 on Japanese AUD demand before falling back as AUD/JPY fell back. The 5%+ plunge in the Shanghai Composite after China curbs on margin trading likely played a part. AUD/USD pushed down to 0.8207 before steadying. Despite increased volatility and commodity price weakness, AUD is showing signs of trending higher again. China data due tomorrow could figure large in AUD’s direction.

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