Trading for much of Friday was dominated by aftershocks following Draghi’s ECB press conference on Thursday with the Euro subjected to fresh selling pressure.
As far as Asian trading was concerned, the Chinese inflation data was weaker than expected with a headline annual increase of 1.8% for April which raised doubts surrounding the economic outlook, although it could also eventually lead to a looser monetary policy which would help underpin global risk conditions.
Domestically, there are still strong expectations that the Bank of Japan will move to further monetary easing in the medium term and, in this context, USD/JPY again found support below 101.50 and moved to the 101.80 area.
The latest UK production data was slightly stronger than expected and there was an improvement in the trade data for March which was countered by a weaker than expected release for construction spending. The net balance was marginally Sterling positive but the currency was unable to gain support with the GBP/USD rejection from 1.70 still hurting. The pair dipped lower to the 1.69 area following the UK data and a break below triggered substantial stops on the downside which helped trigger a move to lows below 1.6850.
The Euro generally was also on the defensive with further expectations that the ECB would sanction a rate cut at the June policy meeting. Technically, the inability to break above 1.40 in EUR/USD and the outside bearish day on Thursday contributed to the negative move and talk of a medium-term top. EUR/USD retreated to 1.3800 and, with stops elected below this level, there was a retreat to key support in the 1.3775 area early in US trading. EUR/JPY also dipped sharply again to test the 140.0 area.
The US job openings data was weaker than expected, but did not have a significant impact given the Euro focus. There was fresh Euro selling pressure later in the New York session with EUR/USD dipping below 1.3775 to lows around 1.3760 with USD/JPY holding above 101.50.
A weaker than expected Canadian employment report pushed USD/CAD sharply higher to highs above 1.0900 from a test of support below 1.0820 ahead of the release.