Closed in NY at $1.2706, having recovered off session lows of $1.26615, with this corrective move extending into early Asia to around the $1.2720 level. This corrective move was given a slight knock as the PBOC fixed the yuan rate at a higher level than expected, Cny6.3230 vs an expected basket level of Cny6.3171, as well as Chinese CPI coming in above pre release offshore rumours at 4.1%. EUR/USD was pressed to lows of $1.2700 on US investment bank sales but move met willing buyers into the dip, an onshore Chinese corporate a noted buyer (said to be covering ahead of Chinese new year Jan23), with others noting demand from regional banks and leveraged accounts. Rate traded to a high of $1.2728 before momentum faltered, the market ‘aware’ of decent sized sell interest sitting at $1.2730. Rate settled back between $1.2705/25 for the balance of the session, trading around $1.2715 into Europe. Attention turning toward today’s Spanish bond auction, results due at 0930GMT, ahead of the ECB rate decision. Most expect no change, though some see room for a further cut.
EasyForexNews Research Team