GBPJPY – Looking Better Bid

GBPJPY – Looking Better Bid

Chart Of The Day

Cable completely reversed course today on a much more hawkish than expected BOE rate decision which included a single vote for a rate hike. Despite some clear slowdown in UK economic growth monetary policy officials are clearly eager to move back to normalization and that helped to put bid underneath sterling for the whole day.

Meanwhile, USD/JPY drifted lower today but appeared to have found a bottom the 113.00 figure leaving GBPJPY in a consolidative position. Although GBP/JPY has been in highly compressed low volatility zone for more than a month, there is a discernable upward pattern to the pair as evidenced by the slightly rising RSI slope. A break above the 141.00 level could signal a major move up.

Part of the reticence in USD/JPY has been due to relatively muted consumer confidence readings, so tomorrow’s U of M data looms large and if it beats, could provide the fuel for a move up in the pair.

EUR/JPY – Can it Find A Bid?

EUR/JPY – Can it Find A Bid?

Chart Of The Day

For more than a year the trend in EUR/JPY has been indisputably downward. The pair made a few half hearted attempts to rally, but only managed to set a series of lower highs keeping the downtrend in place.

The drive lower has been driven both by the weakness in USD/JPY and the weakness in the euro and mirrors the unsettled price action in equities. However after having made a spike low March the pair appears to be climbing higher slowly but surely as each new low lower is higher than than last.

Tomorrow’s FOMC meeting could be key to any near term price action. If the Fed strikes a hawkish tone any weakness in the euro is likely to be more than offset by the strength in USD/JPY and the pair could be back on its way towards 128.00

AUD/USD – Holding Bid

AUD/USD – Holding Bid

Chart Of The Day

Despite a slew of fundamental economic data that suggests further weakening of the Australian economy, the Aussie has been remarkably resilient holding bid above the 7100 mark for the better part of the past month. Last night after the RBA left rates on hold at 2% it issued a statement that was relatively sanguine with the central bank noting that while inflation remained low – providing scope for more cuts, “Recent information suggests that the global economy is continuing to grow, though at a slightly lower pace than earlier expected.”

The Australian authorities offered little concern over the recent slowdown in demand in Asia and the sharp falloff in employment data in Australia last month. Some traders speculated that perhaps the RBA officials had an early glimpse at the GDP numbers due later today and that those numbers suggest that growth Down Under remains on pace for the time being.

If that’s true the Aussie could make another run at the 7200 level as fears of a rate cut begin to dissipate and the pair starts to attract carry trade flows. Still any upside remains limited by heavy resistance at the 7300-7400 corridor and Aussie remains rangebound for now.