EUR: Opened early Europe at $1.2983, Euro-dollar opened in Asia at $1.2969 after the rate had seen corrective pullback lows in European trade Monday at $1.2938, following its correction off post US NFP highs of $1.3072 Friday. Early Asian trade was seen steady between $1.2965/70 before returning Japanese accounts showed decent demand for euro-yen. Rate tracked euro-yen’s rise, touching an overnight high of $1.2988 ($1.2989 38.2% $1.3072-1.2938). Rate drifted off to $1.2980 into Europe, picked up fresh demand that lifted it to $1.2991 before momentum faded. Failure to move above $1.3000 saw rate squeeze down to retest overnight lows at $1.2965, the break below was seen instigated by heavy Swiss name sales, cited on reaction to a wire changing its Spain 10-yr benchmark showing yields above the 6.0% mark. This confusion saw prime brokerage sellers add to the weight that took rate down to $1.2907 before meeting decent support. Market realized the cause of the confusion (Spain 10-yr yields remained below 6.0%) buyers emerged but recovery restricted to below $1.2940.
GBP: Opened early Europe at $1.6042 and stg0.8093, GBP opened Asia at $1.6023, retested Monday lows at $1.6021 before edging to initial highs of $1.6041. Move up was driven by early demand for yen crosses by returning Japanese accounts, sterling-yen able
to extend recovery off Monday lows at Y125.15 to an early Asian high at Y125.70. Cable eased to $1.6027 before picking up further demand that took rate to $1.6046, sterling-yen to Y125.84. Euro-sterling eased to stg0.8088 in early Asia then bounced to stg0.80995. Failure to break stg0.8100 saw rate ease to stg0.8089 ahead of Europe. Cable held firm into early Europe before it turned lower, trailing euro-dollar slippage which allowed the cross to extend its pullback through overnight lows. Sharp drop in euro-dollar to $1.2907, took cable through stops at $1.6020/10 to post an early low at $1.6003. Recovery to $1.6026 reversed on release of poor UK industrial, manufacturing data, along with weak trade data but sovereign demand ahead of $1.6000, along with market wary of the stg0.8100 level, kept rate buoyed.
JPY: Opened in early Europe at Y78.38 and Y101.80, a returning Japanese market, following their long weekend, saw local traders take advantage of the strong yen, and prompted in part as well by reported comments late Monday from vice FinMin Nakao that Japan was ready to act against the strong yen. Dollar-yen, which had seen lows Monday of Y78.09, had recovered to Y78.30 into Asia, later printing highs of Y78.43 and holding firm. Euro-yen also reflected to paring back of yen longs as it moved up to Y101.85 from opening levels of Y101.58. Dollar-yen opened on a softer tone in Europe and as yen sentiment turned the rate pared late Asian gains, sharp cross sales added weight and the euro turned defensive as confusion surrounded the Spanish 10y. One news wire quoted wrong generics for the 10-year Bono and this was cited as a reason behind the sell off as the rate printed Y78.25, later recovering to Y78.35. Euro-yen headed lower in tandem with the dollar and triggered stops through Y101.50, extending losses to Y101.02 before Middle-Eastern demand led the recovery to Y101.30 ahead of NY.
EasyForexNews Research Team