The Euro opened the US session at 1.3220 (8:00 am ET) after having taken out the resistance at 1.3202 and made an initial high of 1.3228.
The much worse than expected April ADP employment figures (119,000, forecast 150,000) made for a weaker dollar and a new euro high at 1.3243. Some position squaring and intraday profit taking helped ease dollar loses and the euro settled back to 1.3225 before the expected Markit PMI figure provided further relief for the dollar taking euro/dollar down to 1.3205.
Another brief euro rally on the back of weak US construction spending and manufacturing ISM brought the euro to 1.3222 where it was met by good offers as risk aversion set in with stocks, gold and oil all performing poorly. A low of 1.3187 was seen before consolidation between 1.3190-1.3200. There was a brief dip down to 1.3178 on reports that a rate cut was high on ECB agenda. After the FOMC statement at 2:00 pm the euro traded in a 1.3170/1.3224 range but eventually settled around 1.3182. The Dow lost 138.85 points to 14,701.00; the S&P 500 shed 14.87 to 1,582.70 and the Nasdaq dropped 29.66 to close at 3,299.13.
Dollar-yen started the US session at 97.47 (8:00 am ET) but quickly slipped down to 97.02 on the back of the weak ADP employment figures but strong demand and risk aversion forced a rally back to 97.38 with gold, oil and equities all lower.
Ahead of the FOMC both dollar/yen and euro/yen were contained in narrow ranges of 97.20-35 and 128.23-48 respectively. After the FOMC statement which some commentators felt was on balance dovish, citing the phrase "prepared to increase or reduce QE as outlook changes", dollar/yen gapped to 97.52 before correcting back to 97.27. Euro/yen buying from 128.10 to128.83 then dragged dollar/yen higher to 97.48 before falling back to 97.35 near the close.
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