The biggest development in Asia has been the Japanese authorities’ efforts to push for a weaker Yen. Talk of the BOJ considering easier policy, the MOF raising the intervention limit, FinMin Kan seeing Yen strength softening, and pension funds persistently on the bid in Usd/Jpy, have all helped to reinforce and corroborate this view.
Consequently, we have been seeing some good demand for Yen crosses overnight, with both Eur/Jpy and Gbp/Jpy potentially looking to base out from their respective lows. We have also been seeing some relative weakness in the Australian Dollar, which has been giving some of its gains back against the Euro and Sterling. Overall, Eur/Usd remains impressively offered on any form of a rally, and it appears that the USD bull trend is not yet ready to relinquish its hold.
Looking ahead, the European session of trade should be relatively quiet from a data release standpoint, with the only key releases coming in the form of UK producer prices (0.2% expected for input and output) at 9:30GMT, and German factory orders (1.3% expected) at 11:00GMT. With the exception of the Yen, all major currencies are up marginally against the buck on Friday thus far, with Kiwi leading the way. US equity futures are mildly bid, while commodities track higher, with oil standing out as the big winner.
Written by Joel Kruger, Technical Currency Strategist for DailyFX.com
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