• USD/JPY -0.6%
• EUR/JPY -0.8%
• EUR/GBP -0.5%

USD/JPY

Repatriation Boosts Yen Bulls: Although markets were overall sensitive to tomorrow's Federal Reserve decision, plenty of Japanese yen repatriation fueled bullish speculation today.  Pushing through the 117 handle in the overnight, traders bid the USDJPY currency pair lower as demand is likely to remain high for the Asian denomination on the eve of the fiscal year.  However, the run could be temporarily hatled should Fed officials remain hawkish following the anticipated decision for a rise in interest rates for the fifteenth time.  Inflationary pressures continue to weigh on central bankers minds as figure heads remain preemptive in curbing rising inflation as expansion looks to be healthier.  Separately, adding to the overall sensitivity of the underlying spot price is the return of representatives Graham and Schumer from their trip to China.  Although likely not voting on the self imposed March 31st deadline, both representatives will still be looking to April 18th visit of Chinese President Hu Jintao.  With market participants likely to scrutinize any statements or suggestions of a revaluation effort, yen looks to gain heavily on the prospect.

Rumorville: Further selling looks to ensue as we head into the asian session. Pressures looks to reside at the 116.75/80 region with no buying in sight till the 116.40 and 116 handle.

EUR/JPY

Fukui Statements Bolster Yen: Yen strength translated into Euro weakness on the cross even as fundamental data suggested improvements in the euro region.  According to the French Business Confidence Indicator, businesses in the European major economy remained constant at 105 as the production outlook survey improved on a downtrending figure last month.  However, traders bid the yen up on the session as comments by Bank of Japan Governor Toshihiko Fukui suggested that the central bank may be electing to raise interest rates as there exist ample evidence to back such a move.  Citing that prices are heading in a favorable direction, the Governor also mentioned that it would not be "desirable to accumulate monetary policy steps and bind them to an end to deflation."   As a result, with most market participants expecting a rate hike in the near term, the statements seemed to have highlighted the underlying speculation.  Subsequently, price action looks to thin as we head into the Federal Reserve decision.

Rumorville: Selling pressure continues should the spot pullback to 140.35 and 140.65/70.  Bid interest looks to surface at the 140 handle, Asian party bids tipped,  with further interest below at 139.80.  Stops are located right below at 139.80 and 139.50.

EUR/GBP

UK Rate Cut Sentiment Dissipates: British mortgages lent sterling strength on the day as further confirmation of a grounded housing sector came to light. According to the British Bankers Association, mortgage approvals vaulted higher by 19 percent to a total value of 15.8 billion pounds.  A notable improvement from the staid lending activity seen in the year of 2005, the report adds to previous surveys by housing associations of a rebound in residential housing demand.  Additionally, it adds to sentiment that consumer sentiment may return and strengthen the previously weak overall figures seen previously.  Subsequently, should consumers return to the market, central bankers may be increasingly reluctant to cut rates, keeping the rate differential high between both the Euro and U.K. economies.

Rumorville: Bids are tipped at the 0.6875 figure and lower to 0.6860.

Richard Lee is a Currency Strategist at FXCM.