[LFX]

Currency issues remain a top concern for global central bankers and finance officials, it would seem. BoE policy makers held an off-the-record briefing for City economists this morning in a bid to reduce speculation surrounding potential policy moves and recent comments on the currency; the upshot appears to be that the BoE seems unlikely to cut the deposit rate anytime soon and that it is not trying to deliberately steer the pound lower (even if a weaker real exchange rate may well be part of the broader rebalancing of the economy). In Japan, Finance
Minister Fujii has had to clarify recent comments by telling markets that he was not necessarily backing a stronger JPY and that intervention was still possible. For Japan, a case of plus ca change … That particular combination of news flow (plus decent data from the UK) suggests to us that GBP/JPY might have some decent – further – short term upside potential after the cross bounced hard from a little beyond the 50% retracement support at 140.96 yesterday. Price action here has
been mimicked on a number of JPY crosses and the recent spurt higher in the JPY may be looking more broadly stretched.

Even the Europeans are getting in on the act; ECB and euro zone officials have been a little more vocal about the EUR exchange rate in recent days, with Mr Trichet and Mr Juncker both looking for the US to reiterate the strong dollar mantra
soon. Short term EUR/USD price action has turned a little heavier in the past week and while the underlying trend remains higher, traders do not rule out a short term test of the 1.4545 support zone – or the more important 1.4450 pivot (August highs).