Forex Trading News  – Currencies Direct

It was back to business as usual in the markets as the search for yield gathered momentum. The big loser was the Japanese Yen surpassing the USD as the currency of choice to sell in the thirst for yield. The recent stimulus from Japan and recent verbal attempts to weaken the currency are finally starting to undermine the Yen; USD/JPY is heading back towards 88.00 and GBP/JPY is back up at 146. The recovery trade is glaringly apparent again with equities gaining- the Nikkei up 3.3%; Gold hitting new highs and Oil gaining.

EUR/USD is still pushing north although momentum has slowed sue to the market awaiting the ECB rate decision at 12:45 today. As usual it will be the press conference following the decision that will be closely eyed. What the market will be scrutinizing is the potential for a shift in the terms that the ECB offers funding to banks on a long term basis- previously a spread of 1% was utilized. What they could look to do is raise the tender or remove it completely and leave it floating- both moves would be considered hawkish and thus euro bullish. In addition to this they could upgrade their GDP outlook which again would be a positive and bullish signal. The main focus will turn to EUR/USD and the next key level is 1.5160 and beyond this 1.5290 to really enforce the bull run. GBP/EUR has softened a little this morning, possibly due to UK PMI services data which came in weaker than expected at 56.60 down from 56.90 in October.

Yesterday the Federal Reserve beige book was released reporting on economic conditions in 12 Fed districts. The tone was slightly upbeat with moderate improvements in most areas, however credit remains tight and employment weak. The key data for the US will be tomorrow’s payroll and unemployment numbers.