EUR – Early Asian demand lifted euro-dollar to $1.3220 on hopes to resolve the fiscal cliff, profit take sales soon eased to settle in a tight range. Macro demand re-tested intraday highs, before the rate spiked to $1.3300 as news hit wires that the US Senate and House of Representatives passed a bill by 257 votes to 167 in order to avert the fiscal cliff. Risk appetite increased throughout the session and the pair later eased to $1.3270. Euro-dollar lifted in early Europe as traders reacted to the overnight news, supply from a German corporate checked moves and the pair settled around $1.3280. Late sales extended losses to $1.3244 and the pair sits at intraday lows as traders reminded of big gaps to fill on the downside. Reported demand at $1.3225/20 ($1.3222 – 5-day ma), a break opens strong bids into $1.3200. Data release light in the US today with highlights from ISM Manufacturing at 1500GMT.
GBP – Opened flat in Asia before the rate ground higher to $1.6270 on reported euro-dollar demand. The pair spiked to fresh 16 month highs of $1.6381 as news hit wires that the US Senate and House of Representatives had approved a deal to avert going over the fiscal cliff. Cable immediately slipped back to $1.6360, profit take sales added further weight to $1.6320. Euro-sterling held firm above stg0.8100 and climbed to stg0.8152 on the fiscal cliff announcement, cross later eased to stg0.8130. Cable lifted to $1.6332 on release of better than expected UK PMI Manufacturing data which came in at 51.4 and the highest reading since Sep 11. Profit take sales eased and the pair slipped in tandem with euro-dollar through $1.6300, extending to $1.6286 ahead of the NY open. Euro-sterling slipped to intraday lows of stg0.8117 on release, but the move was cushioned by demand seen into stg0.8115. A break on the downside opens further bids into stg0.8110/00, stronger behind at stg0.8095/90 with stops set.
JPY – Opened heavy in Asia and slipped to Y86.54, demand into Y86.50 cushioned moves and the rate made an attempted recovery. Dollar extended gains through the Tokyo fix, before taking out the Y87.00 barrier on news that the US Senate and House of Representatives had agreed on a fiscal cliff deal. Stops were flushed on the move and general risk appetite increased as the pair ground to fresh highs of Y87.33. Euro-yen slipped to Y114.18 in early Asia, before bouncing in tandem with the dollar to Y114.90. The cross spiked to Y115.99 on fiscal cliff approval but failed to take out the Y116.00 barrier, later easing to Y115.75. Dollar-yen remained in consolidation mode around the European open, before profit take sales extended the slow grind lower to Y86.98 ahead of NY. On the downside minor demand seen into Y86.80, stronger behind at Y86.50. Early trade in the cross was confined to a Y115.60-90 range, before euro-dollar sales added weight and extended losses to Y115.18, with support seen into Y115.00.
EasyForexNews Research Team