Currency markets traded quietly today in Asia after the earlier New York session experienced the big moves with the dollar shrinking as investors continue to fear that the work of the Federal Reserve may not yet be through. The dollar was barely able to pull itself up from the mats after a news report stated that the FOMC could announce at next week’s policy meeting that they may still engage in further monetary easing. The assumption is that the US central bank could once again enter the market to purchase Treasury bonds once their current portfolio matures.
The EUR/USD peacefully cruised just off of three month highs of 1.3194, stuck in a nominal range between 1.3160 and 1.3185 for the entire session. The languid moves were mirrored in the GBP/USD which maintained a 30 pip range centered near 1.5885, just off of 1.5895 highs. The crosses however moved in favor of the yen, with EUR/JPY dropping almost 50 pips to 113.60 and the GBP/JPY touched a 137.00 low to complete a 65 pip drop on the day. Firmer equities didn’t have the muscle to keep the crosses higher despite decent gains. USD/JPY traded between 86.65 and 86.30, with the lows being hit late in the day. Traders are cautious to buy dollars with NFP employment data lurking ahead on Friday.
The Australian dollar stood proud near 0.9140 highs to start the day, but poor retail sales, (0.2% vs. 0.4%) as well as poor building approvals, (-3.3% vs. 2.1%) knocked the currency just under the 0.9100 level with the RBA rate decision on deck. While the RBA decision brought no surprises with the 4.50% rate remaining untouched, the pair remained hobbled when no hints of future hikes could be found in the following statement. With the RBA noting that the current rate levels are indeed “appropriate”, those in hope of a hike will have to wait until next month.