EUR – Closed in NY at $1.3115, after rate had traded to a high of $1.3120 on general dollar losses. Early Asia extended recovery to $1.3128. Rate reversed post Tokyo fix on euro-yen sales that took rate down to overnight lows at $1.3104. Rate jumped to $1.3130 on reaction to Japanese FinMin Aso comments that Japan will use FX reserves to buy ESM bonds. Further demand extended reaction to $1.3140 before meeting decent supply between $1.3140/50. Rate drifted back to $1.3117 before settling between $1.3120/30 into Europe. The Japan FinMin comment was seen euro-dollar positive, following on from recent similar comments from BOK and PBOC, and seen highlighting the reserve diversification away from the dollar. Euro-dollar came under steady sell interest into Europe, the rate getting pressed to $1.3103 but demand into $1.3100 cushioned with rate recovering to $1.3132 in slow trade. Rate settled between $1.3110/20 in late European morning trade. Release of Eurozone data had little effect. Earlier release of German trade data, with breakdown seen disappointing put focuson Germany factory orders (1100GMT).
GBP – Closed in NY at $1.6117 after rate had been pulled up to $1.6118 as it tracked euro-dollar’s stronger recovery. This move allowed euro-sterling to retrace earlier losses, trading Monday down to stg0.8105, recovering to stg0.8150 in NY. Cable extended its recovery to $1.6129 in early Asia, the rate continuing to track euro-dollar moves as the cross was contained within a tight stg0.8137/51 range. Cable eased to $1.6102, the move influenced by post Tokyo fix euro-yen sales, with recovery efforts capped at $1.6120. Cable was resting heavy on the late Asia posted lows at $1.6101 into early Europe. European corporate and real money sales squeezed rate through $1.6100, with triggered stops taking it down to $1.6084, extending on to $1.6076 ($1.6075 50% $1.6022-1.6129)as euro-sterling moved above stg0.8155 to stg0.8161, though failed to trigger stops above stg0.8165. Traders noted that an Asian sovereign was a noted seller in cable through the European morning. The cross easing away from highs provided some buoyancy for cable but sterling was seen retaining an underlying negative tone.
JPY – Dollar-yen opened heavy in Asia, some linked the move lower to a report in the WSJ that Japanese corporates were warning of the effect a rapid depreciation in the yen. However, this report had been released during the NY afternoon with little effect seen. Y87.50 stops were flushed and extended to lows of Y87.24, before CTA and importer demand in the dip recovered. Dollar spiked to Y87.83 on reaction to FinMin Aso comments that Japan could buy ESM bonds with reserves, but as traders realised the reaction was premature the pair eased to Y87.40. Euro-yen slipped on the open to Y114.48, before spiking to Y115.24 on FinMin Aso comments, later paring gains to Y114.55. Dollar-yen was tied to a narrow Y87.33-48 European range in a very quiet session. Asian sovereigns were reported sellers through Y87.45/40 in early trade, but the market took it well as focus turns to NY for direction. Euro-yen continued the heavy tone from late Asia and slipped to Y114.48, before the cross met demand in the dip and tracked euro-dollar’s extended recovery to Y114.75.
EasyForexNews Research Team