EUR – Opened early Europe at $1.3211, Euro-dollar closed in NY Wednesday at $1.3228 as rate extended its corrective pullback from intraday highs at $1.3309. A stalling in Fiscal Cliff talks, with Pres. Obama warning that he will veto the Republican ‘Plan B’, acted to dent the recent risk on tone. Late NY, early Asia sales of yen pairs by US speculators acted to provide further weight into the overnight session, with Asian traders also noting negative reaction to a Greek FinMin FT interview where he suggested 2013 is a make or break year for his country. Euro-dollar was pressed to extended lows of $1.3187 but quickly picked up demand interest which allowed it to bounce to $1.3230. Rate drifted back to $1.3204 ahead of Europe, the recovery picking up momentum into the session open but offers into $1.3230 again provided a counter. A dip to $1.3209 met demand with rate able to recover through the balance of the European morning, breaking above $1.3230 to $1.3240, with rate holding firm ahead of NY. Festive season markets seen subduing activity.
GBP – Opened early Europe at $1.6248, stg0.8130, GBP closed in NY Wednesday at its corrective pullback lows of $1.6248, seen after rate had been rejected from $1.6307 and having failed to post fresh 2012 highs above $1.6310. The move down was provided with added weight as euro-dollar also eased off highs with the recent risk on tone given a jolt as Fiscal Cliff talks in the US look to be stalling. Cable jumped up to $1.6260 into the Asian session, as euro-sterling extended its corrective pullback from Wednesday highs of stg0.8168 to stg0.8122, but the move down in euro-dollar into Asia countered and squeezed cable to session lows of $1.6238. Buyers quickly took advantage of the dip and edged it back to $1.6260, as the cross touched stg0.81155 before recovering. Recovery in euro-dollar saw cable edge on to $1.6263, but correction to stg0.8140 saw it settle between $1.6245/55 into Europe. Cable recovered in Europe, pushing to extended recovery highs of $1.6271 ($1.6173 50% $1.6307-1.6238) before momentum faded, but underlying buoyant tone remained in place to restrict pullback to $1.6255.
JPY – Opened in early Europe at Y83.93 and Y110.95, Dollar-yen and euro-yen both came under heavy selling through the NY-Asia transition, the former getting shoved down from its close at Y84.40 to Y83.94, with stops triggered on the move. Euro-yen extended its corrective pullback off earlier highs of Y112.59 to Y110.82 as US speculators pared back short yen positions ahead of the BOJ policy announcement. BOJ announcement that it would increase its Asset Purchase Fund by Y10tln (though traders point out that only Y5tln will be used to increase outright JGB buys) prompted a volatile react in yen, before yen demand acted to take dollar-yen to extended lows of Y83.86, euro-yen to Y110.74. Dollar-yen opened flat in Europe and with little reaction to the overnight BOJ policy headlines, trade was tied to a narrow Y83.87-84.02 range. Early supply pressed euro-yen to Y110.80, before support in the dip cushioned moves and extended corrective pullback efforts to Y111.05. The cross tracked late euro-dollar demand to Y111.26 and remains buoyant ahead of NY.
EasyForexNews Research Team