- Fed mulls symbolic shift – WSJ “Officials to consider putting more money into bond market as recovery wavers”
- Federal Reserve to start the deflation fight next week, expert claims – The Telegraph
- Japan FinMin Noda: Markets decide forex rates
- Swiss CPI -0.7% m/m, +0.4% y/y, weaker than median forecast of -0.5%, +0.7% respectively
- UK July construction PMI 54.1 in July vs 58.4 in June, much weaker than median forecast of 58.0
- Euro zone June producer prices +0.3% m/m, +3.0% y/y, in line with median forecasts of +0.4%, +3.1% y/y
Bad morning for the greenback which has lost ground across the board. The market noted the WSJ article (see above) tipping further QE and that sowed the seeds.
EUR/USD having started around 1.3170 is up at 1.3250 having been as high as 1.3261 so far. Initially EUR/USD dipped lower to post session low 1.3147. That’s when the Bank of Korea stepped into the market buying both EUR/USD and GBP/USD.
Barrier option interest at 1.3200 gave out rather easily, aggressive buying from a major French bank helping take out the level. Said bank was then seen profit taking in the 1.3220/30 area. That didn’t stop the rally though. UK clearer seen strong buyer in the 1.3240’s and we got eventually to session high 1.3261. Russia is said to have sold around the highs and we’ve settled back to 1.3250 at writing.
Cable got a good early lift from Bank of Korea buying and we were quickly over 1.5900. Selling by a large US hedge fund helped cap initial rally but cable remained well-bid. It experienced a slight dip after the release of very poor construction PMI data but strong UK clearer buying helped lift the pairing again.
The 1.5968 level is very well noted as fibo 61.8% retracemenbt level of 1.7042-1.4268 sell-off.
USD/JPY down at 85.80 from early 86.40. Talk of Kampo down at 86.10/20 caused some iniitial hesistation, but comments from Japanese FinMin Noda (see above) helped gurd the USD bears’ loins. There was talk of sovereign bid interest below 86.00, which has helped slow, but not stop the sell-off.