European Market Update

European Market Update

The JPY currency maintained a soft tone amid growing hopes for more aggressive BOJ easing. The Japanese cabinet was also said to endorse a ¥700B stimulus package lather this week. The USD/JPY moved firmly above the 80 handle during the session to test its best level since late June. Dealers noted that it was typical for Japan to pre-announce its intentions through press leaks for major economic programs and now are assuming the govt stimulus plan would be announced tomorrow (Friday) and the additional BOJ QE will be forthcoming next Tuesday

Dealers were pondering whether the recent rise in the GBP over the past 24 hours on whispers of a better GDP reading would be 'baked in' after the release and to curb any upside momentum. However, the strongest quarterly reading in 5 years provided some additional upside for the GBP currency. The GBP/USD moved from 1.6090 to test 1.6135 in the aftermath of the release before consolidating. The UK Olympic ticket sales did account for 0.2% of reading

The EUR/USD maintained a stance above the 1.30 throughout the session. Dealers took note that the various European countries saw bank deposit growth in September. Italian bank deposits rose to a record level while Spanish registered their first MoM increase in six months. Greek bank deposits hit its highest level since May.

Sweden Central Bank statement was more dovish than expected as it cut both its growth and inflation forecasts and again lowered its Repo Rate path for the next two years. The EUR/SEK cross exhibited some volatility following its decision to hold rates steady as dealers shifted through the commentary and outlook.