ForexLive European morning wrap: early action on yen but quiet since with NFPs now the focus

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The forex trading headlines for the european morning session

  • Volatile action in Japanese bonds and equities. Tokyo stock exchange suspends trading in JGB futures
  • USDJPY posts highs of 97.15 as bond yields fall but then falls to 95.86 on sharp yield reversal
  • Nikkei closes up 1.58% at 12,833.64 after posting highs of 13,225
  • German industrial orders feb +2.3% vs +1.2% exp -1.9% prev
  • Eurozone retail sales m/m -0.3% vs -0.2% exp +0.9% prev
  • UK house price index m/m +0.2% vs +0.2% exp +0.5% prev
  • SNB fx reserves march revised up to CHF 438.3 bln from 430 bln. fastest rise in 6 months
  • BOE’s Dale says QE doesn’t have dimishing returns and sees FLS providing more lending growth this year
  • BOE FPC says UK banks should hold at least 7% capital vs risk-weighted assets
  • German fin min says monetary policy must not be used to boost exports. said Japan agreed to this at Moscow G20

No sooner had I sat down this morning when we saw a wave of yen buying with end of week book squaring once the 10 year bond yields started a sharp reversal having traded at record lows earlier. 97.15 soon became 96.60. The Tokyo stock exchange had suspended trading in JGB futures due to the volatility and USDJPY got sold even further as yields continued to reverse higher. 96.00-10 was supposed to offer decent support but we were through there quite easily before stopping at next support line at 95.85 and bouncing back to 96.40. The pair has dipped again below 96.10 since but it’s been well behaved for the past few hours

EURJPY got pulled around in the early mayhem and after highs of 125.60 we’ve been back to 123.87.  EURUSD therefore headed lower initially to 1.2900 from 1.2938 highs but failure there and USDJPY buyers meant a slow rally  to eventually post session highs of 1.2939 after better than expected german industrial orders.

The Pound has had a non-event morning with GBPUSD trading 1.5200-40  and mostly 1.5215-35. EURGBP has traded 0.8478-93 while AUDUSD has also had a quiet morning with bids at 1.0400 still holding any downward moves from the AUDJPY sell-off.

A very boring session overall as traders understandably await US non-farms in just over an hour when we can expect it all, hopefully , to kick off again.

Author: Mike Paterson

Mike Paterson has more than 30 years of experience trading FX including as a senior trader with UBS and Credit Suisse. He was also head of FX at the State Bank of Victoria. With sizeable daily trading volumes Mike carved out a name in the market combining professional integrity with a cynical grasp of seizing market opportunity. Since leaving the City, Mike has been working as an independent consultant and trading along with presenting seminars and writing for a number of publications. Mike lives in Kent and supports Southend United FC.

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