The single currency slipped against the US dollar overnight before rallying, with EURUSD bouncing off support around 1.0880 to once again trade above 1.09 at the time of writing. The dollar index dropped a touch, with US treasury yields slipping, helping GBPUSD to remain mid recent range above 1.27. Range trading is likely in the next few days ahead of Thursday’s ECB meeting and US data coming towards the end of the week.
The first major central bank meeting of the year came and went with few fireworks, as the Bank of Japan kept markets guessing over just when it will shift policy. The BoJ kept its negative policy for now, and at the same time hinted that it is getting more confident about hitting its inflation target. The central bank maintained its -0.1% rate, keeping yield curve controls in place and cut its inflation forecast for the fiscal year. USDJPY slipped as Governor Ueda started his speech, however much of the move can be attributed to USDCNH which is leading the way in Asia trading.
The Chinese yuan fell overnight after reports that Chinese authorities are considering a package of measures to stabilise the falling stock market. The measures come after the benchmark stock index fell to a five-year low, with policymakers looking to mobilise around 2 trillion yuan ($278 billion) as part of a stabilisation fund to support markets and calm retail investors who have also been impacted by the ongoing property downturn.
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