The euro rose to its highest in almost 11 months Monday morning in Asia, with the absence of Japanese markets today allowing euro bulls to shine amid a continued improvement in sentiment toward the single currency. Japanese markets are closed for a holiday Monday, and after the yen’s recent volatility, allowed markets some respite to look at other currencies for ideas. The euro instead was in focus today, as it climbed toward $1.3400 since the early morning, peaking at $1.3395 in the late morning, its best level since late-Feb 2012. “The single currency has been lifted on a successful Italian bond auction and an announcement from Spain that it plans to sell more debt,” commented analysts. Euro-dollar swept through some sell orders near $1.3370 and then hit some
stop-loss buy orders from $1.3375 before option-related selling ahead of $1.3400 hampered the move. Still a break of $1.3400 is likely later today, according to dealers, putting the pair in range of the February 2012 highs near $1.3486, traded at the time of the ECB’s second three-year LTRO. Few however, expect the euro to break out of a $1.30 to $1.35 range in the near-term, although there could be brief forays outside the range at times. “Given the unwind of euro shorts and the improvement in the financial environment, some further upside for euro-dollar is possible but is likely to be limited,” commented Barclays Capital analysts. “The economic outlook remains depressed and is likely to be challenging in 2013. We therefore continue to expect euro-dollar to fall to $1.2200 in 12 months.” Aussie-dollar also enjoyed some decent gains this morning, as it made a late morning high of $1.0556 after an earlier low of $1.0524. It was last at $1.0 , still below last week’s highs near $1.0600 but holding near its best levels since September last year, when it peaked at $1.0625. Ahead this week, while U.S. data sets will be eyed, especially December retail sales (analysts median at +0.6 for headline and +0.4% ex-motor vehicles) and preliminary University of Michigan consumer sentiment, the focus will be on Federal Reserve Chairman Ben Bernanke’s speech Monday and any hints he may offer about monetary policy. “Risk appetite requires two things to maintain its upside momentum this week. The Fed must reassure on its QE3 intentions while China must reaffirm its growth recovery story,” said DBS Bank analysts.
EasyForexNews Research Team