Highest EUR Close Since 2011, Yen Crosses Jump

A healthy dose of volatility gripped markets as Draghi boosted the euro and yen crosses slumped. The Australian dollar was the top performer while the yen lagged. RBA Governor Stevens tried to jawbone down AUD in early Asia-Pacific trading to no avail.

The moves on Thursday in the FX market were as large as any day this year. The action started with the best jobless claims data since November as the 323K beat expectations of 336K. The numbers boosted USD/JPY by 40 pips and above 103.00 for the first time since January.

It also highlights the divergence we've highlighted in economic data. On soft releases, namely the ADP and ISM data this week, USD/JPY was reluctant to fall. Now with an upbeat number, the pair surged.

Strength in the yen crosses was aided by a major move higher in EUR/JPY on Draghi's comments. Or more accurately, his lack of comments. The market was looking for a hint at further action but the ECB President said upside and downside risks to inflation are limited and broadly balanced over the medium term. EUR/JPY jumped 230 pips to 142.90 and EUR/USD closed at the highest level in more than 2 years.

Other yen crosses took out the recent highs as well and NZD/JPY was particularly noteworthy, hitting the highest since 2007.

If the market can hold these levels through non-farm payrolls, this could be the start of some extended trends.

The Asian schedule is typically light as the week winds down. The focus will be AUD/USD after it rose above the Jan/Fed double top to form a bullish inverted head and shoulders pattern.

RBA Governor Stevens is speaking in parliament but the early lesson is that if we've heard it before, it's not good jawboning and that was the case early in Steven's 3 hour appearance as he repeated the same concerns about a high AUD to no avail. Stevens also forecast a period of stability on interest rates but warned that inflation is not rising as fast as the data would suggest.