Yen retreats; Euro holding broadly steady ahead of ECB rate news
February 2nd - The Yen has continued to retreat in overnight trade against the dollar and although there’s been a little support creeping in simply on the back of dealers not wanting to over-commit ahead of the key economic data that’s due out of the US tomorrow, consensus appears to be mounting that rate hikes will continue from the Fed in the months to come. They may not be quite as consistent as we’ve seen over the last eighteen months, but better dollar yields will continue to drive funds into the US in due course. The ECB is also due to declare its latest monetary policy today although there’s no real expectation we’ll see any change in the near term, with many instead believing this announcement will pave the way for 0.25% to be added at the bank’s March meeting. Certainly there are no tangible signs of support coming through for the common currency just yet, but EUR USD is holding clear of the psychological 1.2000 level. Any move below this line could result in a bigger correction, but assuming the bank’s policy makers have no surprises in store and leave the way open for higher rates in the next month or so, current levels may well be sustainable.
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