The European session continued the USD selling theme in the wake of the FOMC announcement last night, which has given mixed signals to the market, though one which has seen the less hawkish view the prompt to sell USD’s, though profit taking more likely the case. Certainly against the likes of GBP and CAD, the USD push has been overdone, with oil prices rising through $45 and $46 in front month WTI to see the latter testing 1.3000. Late in the day we saw the Genscape report arresting gains in both CAD and oil, but both remain on the front foot. For GBP, it has the BoE’s Forbes who came to the rescue, arguing that there was no need for further easing measures, and that the recent economic data could see projections revised higher.
Cable took out the resistance ahead of 1.3100, but through here, USD selling momentum as a whole has started to slow. EUR/GBP was looking to retest the highs just above .8630 from Tuesday, but we now look more likely to try .8560-65 lower down, though a buoyant EUR/USD is throwing a spanner in the works for GBP bulls. Spot EUR resistance from 1.1250-75 is stalling gains for now, but NY desks are likely to test this later on. This may come in conjunction with a USD/JPY recovery of sorts, as we have seen buyers coming just ahead of 100.00. Limited follow through since, but after Wall Street gains seen yesterday in particular, the post BoJ disappointment/sell off may perhaps be a little overdone.
Fresh warning’s from the MoF that the market is again being closely monitored is a more likely reason for near term consolidation, but upside gains likely to be limited. AUD/USD has enjoyed a positive week, but this may start to wane as we look to .7700 higher up. Plenty of selling interest comes in from .7675, but not major pullback as yet. NZD remains lethargic, and is struggling to keep up with the rest of the pack after the ‘poor’ result at the GDT auctions earlier in the week