EUR/JPY, EUR/GBP and EUR/CHF are all well supported this morning as the euro extends its surge against the dollar. The sudden attraction of the euro is a bit mistifying though it appears the lack of political drama in the salons of Europe are a stark contrast to the panic seen in the White House and the US Capital in recent days.
EUR/JPY is well underpinned as Japan looks to be in the worst shape of the G7 and has a limited toolkit to deal with the crisis at the moment. The BOJ has been quite tentative in shoring up the Japanese banking system relative to the Fed and the BOE. Yesterday’s forecast for a 5% hit to GDP from the IMF continues to resonate.
EUR/GBP has probed above 0.9400 this morning as UK unemployment tops the politically sensitive 2 million mark. New banking rules from the SFA are also quite restrictive, which could hamper the City of London money-machine once the global economy recovers.
EUR/CHF has seen strong buying this morning, underpinned by strong rebound from the 1.5280 level. The bounce was strong enough to spark talk of renewed SNB buying, though we have not gotten confirmation on that front.