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During the Tuesday Asian session, sentiment on risk turned cautiously negative. The Japanese government cut its assessment on the economy as slowing global growth is weighing on exports. EUR/JPY selling in thin market conditions was said to have pushed EUR/USD lower, too.
At the end of last week and yesterday morning, USD/JPY tried to move away from the post-Minutes’ low. However, the move clearly had no strong legs. USD/JPY reached a correction high at 78.84 in Asia, but there were no follow through gains even as sentiment on risk wasn’t that bad during the European trading session. The pair settled in a tight range roughly between 78.65 and 78.80 for the remainder of the session.
The USD/JPY dropped from the 78.75 area to the 78.50 area. Surprisingly, the move occurred as the Japanese government downgraded its assessment on the Japanese economy. At the same time, the dollar was also higher against most other majors. Of course, the price move is rather limited and is developing within the recent ranges. Nevertheless, it suggests that the topside in this cross rate might remain difficult for now. Trading might be confined by the 78.28/78.84 trading range.
Yesterday the UK markets were closed. EUR/GBP developed in thin market conditions. The pair basically followed the price pattern of the EUR/USD headline pair. It touched an intraday low just above the 0.79 mark early in Europe and then settled in a tight sideways range in the lower half of the 0.79 big figure. EUR/GBP closed an uneventful trading session at 0.7914, unchanged from the close on Friday.
Today, the UK calendar is empty. So, EUR/GBP traders will look for inspiration at the euro side of the story. That said, we have the impression that underlying sentiment on sterling is not that strong (cable shows a toppish pattern, more outspoken than is the case for EUR/USD). This could allow EUR/GBP to move higher in the current consolidation pattern. However, we don’t anticipate a break beyond the 0.7963 range top.
Not much is expected for the GBP/USD either, in early trading this morning, following the change in attitude and sentiment, the pair declined to trade at 1.5789. Gold also tumbled close to 12.00 in the Asian session.
The EUR/USD has been steady for the a while at 1.2486.
Today's events will be the Richmond Fed, the CaseShiller Home Price Index and consumer confidence; otherwise traders are left to their own accord.
Spain and Italy are both in the bond markets today.