Overnight Asia/Europe

USD two-sided in range bound trade

Overnight news thin but important

BOJ holds rates steady as expected

Todays Economic Reports

None of note in the US

Looking Ahead

7:30 Am CDT Thursday Balance of Trade 57.4B

Friday Michigan Sentiment and G7


The USD is two-way to start New York after a relatively quiet overnight session that saw nothing unusual in the way of news. Starting a bit weaker in Asia the USD followed through briefly from US selling pressure but began to recover to press for highs during European trade. The BOJ held rates steady as expected which saw little initial reaction in the USD/JPY but within an hour or two the rate began to slide off as the Yen gained a bit on the news. No new Governor as of yet and that may be keeping the USD/JPY pair range-bound as the BOJ lacks direction and it is not known if a hawk or a dove will be appointed next. The Japanese economy is beginning to show signs of weakening and it is reasonable to expect that rates wont change ahead of the end of the year. USD/JPY lows overnight at 102.16 with highs in Europe at 102.84 (again). Talk of option defense and official sales are limiting the upside this morning traders say. Cable remained inside established ranges for most of the overnight action but managed to probe for stops said to be resting in the 1.9650 area; low prints at 1.9649 but recovered after better-than-expected UK Industrial Production numbers came out. Highs in the rate at 1.9727 are right up against S/R and a failure here opens the door for the 2008 lows in my view. Aggressive traders can add to open shorts at the 1.9700 area if not already yesterday; look for the rate to close under the 1.9600 area on the week after US news tomorrow and Friday. Dont forget the BOE meets tomorrow and a 25 BP rate cut is expected so some volatility around the news is likely. EURO continues to grind higher between the 1.5680 are and the 1.5750 area; low prints at 1.5682 and high prints at 1.5743 leaving stops on either side of consolidation untouched for now. Eurozone GDP released about as expected but showing a brief dip q/q while remaining at +2.2% overall; EURO had a muted positive response but unable to go anywhere at this point. US action today likely to keep the USD range bound one more day ahead of news due tomorrow; technical trade within expected ranges will likely make for a quiet day. Look for book-squaring at the London fix to provide some volatility.

Analysis by: Forexpros.com written by Jason Alan Jankovsky


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