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Single Currency on Top as EUR/JPY Tests Downtrendline

FOREX
  • The EUR is outperforming all others in G10, buoyed by a slightly firmer than expected final Q3 GDP reading, with markets setting their sights on next week's ECB decision, at which the bank are expected to raise rates by 50bps - although a 75bps move is not out of the question for many on the board.
  • The EUR strength has helped EUR/JPY push higher still, with the 50-dma the next upside level at 144.59 ahead of key downtrendline resistance drawn off the 2022 highs at 148.40 - this level is marked today at 145.16.
  • GBP also trades well, second to just the EUR in DM FX space. The currency is recovering after a late rally on Tuesday was wholly erased ahead of the NY close (supporting the theory that the impulsive rally was fix-driven), which prompted a 1.2107 low in Asia-Pac hours for GBP/USD. A clean intraday break of 1.2153 congestion opens 1.2169 and yesterday's highs at 1.2269.
  • A loosening of China COVID restrictions has done little to prop up the risk sentiment backdrop, although JPY remains among the poorest performers today. NOK is similarly weak as the oil prices holds close to the lowest levels since January.
  • There are no tier one US data releases, keeping focus on the Bank of Canada rate decision, at which markets are split between a 25 and a 50bps rate hike - MNI leans toward 25bps in our preview.
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