FXstreet.com (Barcelona) - During the countdown to the US open we took a look at this afternoons research. Unlike this morning where GBP was in sharp focus, this afternoon sees a distinct focus on Europe following soft GDP data, and Japanese monetary policy, with the G20 starting tomorrow.
Brown Brother Harriman note that having trended higher of late, disappointing Q4 GDP figures saw the Euro sold to three week lows. They feel that there is potential for further Euro downside ahead as part of this months correction. Clemente De Lucia of BNP Paribas feels that despite the deepening recession, 2013 prospects are slowly looking optimistic while Peter Vanden Houte of ING however, believes that the outlook for 2013 looks subdued and he can't write off the possibility of ECB easing ahead. TD Securities note that EURUSD and EUR crosses have been under pressure, "softening momentum and further denting the well entrenched bull trend in place since November". Camilla Sutton of Scotiabank flags comments from the ECB's Constancio suggesting that negative interest rates are a possibility. She feels that this fits well into the framework of a more accommodative ECB. Finally, Nick Bennenbroek of Wells Fargo is expecting extended Euro weakness against the Dollar for some time off the back of weakening fundamentals.
Looking east, Yujiro Goto comments that BoJ Governor Shirakawa neglected to offer a Valentine gift for the economy, leaving policy unchanged. Jane Foley of Radobank meanwhile focuses on the dovish beauty contest currently underway between competing candidates, each seemingly vying to show who is the biggest dove of them all. TS Securities analysts are somewhat more sombre and note that despite the more popular headlines, the Japanese economy remains mired in a triple dip recession. As with his Euro outlook, Nick Bennenbroek of Wells Fargo sees the Yen softening further against the Greenback off the back of soft economic fundamentals. Brown Brothers Harriman analysts note that despite the previous G7 comment cuffuffal, Japanese officials were back on the wires commenting on specific price targets. They write, "Outside of one Fed official expressing some misgivings about what Japanese officials were saying about the yen, and Treasury Secretary designate Lew endorsement of a strong dollar policy, the US has been as usual quiet about the exchange rate."
Despite GBPUSD being largely off the table in terms of coverage, it has continued to weigh under mounting pressure. A red day for Europe has been followed by a promising improvement in US jobless claims. With two Fed speeches ahead and the G20 tomorrow, commentary is somewhat subdued in the build up.