Commodity currencies had a firmer tone during Tuesday and maintained this advantage on Wednesday as AUD/USD moved to highs above 0.9230, the highest level for over four months. USD/CAD also retreated sharply to lows near 1.1120 before finding support.
The Euro was hampered by selling against the Australian currency and there was a wider shift in positioning during the day with the Euro at risk given the sharp increase in speculative net longs. EUR/USD was unable to make any impression on resistance towards 1.3850 and retreated to test support below 1.3800 during European trading.
There were no significant comments from ECB officials during the European session on Wednesday with markets on high alert for any fresh rhetoric from key officials following the quantitative easing hints the previous day.
There was a further slip in Swiss franc demand as the Euro looked to break back above important former resistance area in the 1.2200/20 area while USD/CHF also looked to break above 0.8870.
The dollar was able to hold its ground against the yen with USD/JPY finding support above 102.0 on yield grounds. Ranges were, however, very narrow with movement hampered by a substantial number of option expiries during the New York session.
Sterling was a significant mover during the early European session on Wednesday as GBP/USD broke higher from a position near 1.6500 to peak just above 1.6550. There were comments from Bank of England MPC member Weale that the economy was looking better and that interest rates could not stay at 0.5% indefinitely. Weale has been one of the more hawkish MPC members, although his comments offered little fresh news to the debate and the Sterling spike looked more related to a squeeze on short positions. GBP/USD held a firm tone as EUR/GBP retreated to the 0.8325 area.
Although the headline US durable goods data was stronger than expected with an increase of 2.2% for February, core data was slightly disappointing at 0.2% and the dollar failed to gain any traction following the release as traders probed short-term technical areas without success as EUR/USD consolidated just below 1.3800.