Asia Recap: Euro bounces after late US sell-off

FXStreet (Bali) - No much definition in G10 FX during Asia, with the Euro in recovery mode after the late US plunge following news that the ECB will no longer accept Greek bonds as collateral for funding, while the Aussie saw a better tone, and the Yen neutral.

AUD/USD was kept most of the session within Wed's familiar range between 0.78 and 0.7745, with a brief drive below the later to 0.7730 lows on stop-hunting post a slightly softer Aus retail sales (+0.2% in Dec vs +0.4% exp). The counter-intuitive bounce post 0.7745 break-out caught fresh sellers wrong-footed, having to run for the exits after a turnaround towards 0.7790 session high. Same action was seen in NZD/USD, playing catch-up with the Aussie, initially breaking through 0.7350 only to reverse its losses to currently trade circa 0.7380.

USD/JPY was initially pressured, but solid bids ahead of 117.00 held the bearish tide, originated in late US when the ECB announced the lift of Greek bonds' waiver, leading to sharp sales in US equities, with the market now anticipating tougher negotiation between Greece and the Troika to reach a new debt deal, a scenario that may help maintain a risk-off environment. News that Japan had nominated Harada (dovish) as a new BoJ member saw the Yen complex spike over 20/30 pips across the cross, with USD/JY making a high of 117.43. The election of Harada is seen as a strong sign that the BoJ stance will continue to be focus on an easing bias, with should support USD/JPY.

EUR/USD managed to stall from Wed's sharp losses ahead of 1.13, where over 500ml worth of bids between 1.1298 and 1.13 are rumored, according to unnamed market sources. The pair saw a 50/55 pips bounce in Asia, finding a ceiling at 1.1360. GBP/USD also recovered the 1.52 handle ahead of the monetary policy decision by the BoE later today.

Key headlines

ECB's Praet: QE not adopted to depreciate Euro, economy improving

Japan Foreign bond investment rose from previous ¥45.6B to ¥675.2B in January 30

Japan Foreign investment in Japan stocks fell from previous ¥466.9B to ¥-104.8B in January 30

Australia HIA New Home Sales (MoM) fell from previous 2.2% to -1.9% in December

Greek MoF: ECB adds pressure on Europe and Greece to reach deal

Australian retail sales misses expectations in December

Australian retail sales a touch softer - ANZ

China: Expect a lot more monetary easing in 2015 - Nomura

Japan nominates Harada - dovish - to be BoJ member