Kantox currency update: dollar and yen gain with stocks tumbling
The U.S dollar and the Japanese yen outperformed their main peers on Thursday in a session marked by a strong volatility, with investors rushing from risky assets like stocks and looking for shelter into safe havens.
The euro has extended its decline from 3-year highs, with the market losing faith on the ECB’s plans to normalize its monetary policy, while the British pound bounced up against the dollar and the euro, buoyed by the Bank of England’s hawkish signals at its latest monetary policy meeting.
EUR/USD reversal from 1.2540 approaches 1.2200. The euro extended its decline amid generalised risk aversion, extending its reversal from last week highs above 1.2500 to two-week lows at 1.2200. At London market opening times, the EUR/USD is trading at 1.2265.
GBP/USD: bounces up to test 1.4000 level. The pound bounced up strongly from 1.3850 lows on Thursday, boosted by the unexpectedly hawkish tone of the Bank of England’s monetary policy meeting, which pushed the pair to intra-day highs at 1.4060, although it has been unable to hold above 1.4000. At London market opening times, the GBP/USD is trading at 1.3985.
USD/JPY: testing support at 108.50 again. The dollar retreated on Thursday against a stronger yen pulling back from intra-day highs at 109.75, to seek support near 5-month lows at 108.50 area. At London market opening times, the USD/JPY is trading at 109.15.
In the Calendar Today
At 09:30 GMT National Statistics will release the UK Manufacturing and industrial production figures. After a strong performance in November, both manufacturing and industrial activity are expected to have slowed down in December. A sharper than expected decline might hurt the pound.
09:30 GMT UK: Manufacturing Production (MoM) (Dec)
Previous: 0.4% Expected: 0.3%
09:30 GMT UK: Industrial Production (MoM) (Dec)
Previous: 0.4% Expected: -0.9%