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GBPUSD

Sterling Soars On Dovish Comments

Monetary policy suggestions helped the pound sterling to rocket higher through key technical levels in the North American session. Bouncing off of the morning's lows at 1.7828, the pound soared past 1.7950 and 1.8000 barriers with ease following dovish comments by Federal Reserve Chairman Ben Bernanke.

Expecting growth and inflationary pressures to continue, the Chairman noted that policy makers may be inclined to halt rates on any suggestions of weakness in the economy, highlighting increased scrutiny on the overall housing sector. Merger activity additionally bolstered the underlying pound as benign comments issued by the Bank of England's Barker suggested a no rate cut bias by policy makers.

As a result, tomorrow's gross domestic product figures are likely to be scanned rather than analyzed as a dovish hush has befallen the dollar. Next up for sterling enthusiasts looks to be the GfK consumer survey. Expected to improve, the survey should lend to further stabilization notions for the benchmark rate as it reflects rising consumer sentiment.

Rumorville

Bids continue to prop up the underlying pair with considerable interest slightly below on a pullback at the 1.7950 barrier. Additional offers continue to hang near the top of the session's move, established at 1.8050.

EURUSD

Euro Economic Data Heightens Dollar Weakness

Aside from the rather dovish comments by Federal Reserve Chairman Bernanke, in line economic figures for the 12-nation euro bolstered the underlying currency pair. Expected to drop to 11.3 percent from 11.4 percent, the unemployment rate dipped in line as jobless claims fell 40,000 on the month.

Reflective of an improved employment environment, the rate continues to remain rather high, weighing on the minds of central bankers. Nonetheless, Central Banker Garganas noted that current rates continue to remain relatively low, suggesting to traders that rate hikes may look to be imminent as the European Central Bank remains preemptive in its inflationary defense. Subsequently, business conditions and outlooks improved better than expected in Italy as U.S. initial jobless claims rose for the week, exacerbating the dollar's losses on the day.

A slew of data is expected to influence tomorrow's fluctuations as German retail sales and consumer confidence lead the full docket of events. Interest rate speculation looks to be heightened should the figures reach higher marks.

Rumorville

Offers are looking heavy at the 1.2550 figure with large stops above the level. Continued selling is positioned at 1.2585 and the figure with incremental bidding below at the 1.2500 figure. Buying interest builds as we head lower finally capped at the 1.2450 level.

USDJPY

Watanabe Comments Cap Yen Gains

The major currency pair was relatively quiet heading in to the New York open but reacted following an increase in benchmark rates for the Chinese economy. Signaling higher inflation rates in the Pacific region, bidders came in with size on the USDJPY pushing the pair even lower over the North American session as expectations mounted for a similar scenario in the world's second largest economy.

Fueled further by dovish remarks by Bernanke, the pair has pulled back slightly as statements by Ministry of Finance Watanabe capped yen gains. Watanbe commented that markets had misinterpreted earlier G7 statements and that no dollar weakness was preferred by finance ministers. This coincided with some heavy option defense at 114.00 ahead of the close. More action looks to ensue on today's full schedule of events.

Rumorville

Option defense looks heavy heading into the Asian session with options at 113.80 following a tip of the major 114. Other barriers are noted in figures at 113.50 and 113.00 while selling pressure remains above at 114.40 and 114.60.