EUR – Closed in NY Monday at $1.3382, off rate’s late recovery high of $1.3395 after it had seen a sell off to $1.3336 earlier in the session as markets adjusted positions ahead of Monday evening’s Fed Bernanke speech. Rate eased to $1.3372 in early Asian dealing before edging back to $1.3394, the move up mainly driven by euro demand via the crosses (euro-yen, euro-Swiss and euro-aussie the stand out interest). However, upside momentum quickly faded ahead of $1.3400 with rate reversing to $1.3349 in afternoon Asian trade, led by a reversal in euro-yen as market reacted to comments from the Japanese economy minister. Rate recovered to $1.3365 before settling between $1.3350/60 ahead of the European open. Rate came under another round of selling into Europe, stops sub Y118.50 in euro-yen provided the drive that saw euro-dollar ease to $1.3334. Buyers quickly emerged into the dip with macro buying pressuring the rate to an initial high of $1.3377 before extending on to $1.3388. Release of slightly weaker than forecast Germany 2012 GDP data had little effect.
GBP – Closed in NY Monday at $1.6076, seen after rate had recovered off a US session low of $1.6033 to $1.6092. Rate dipped to $1.6069 in early Asia before recovering in line with euro-dollar, the rate trading to $1.6094 before upside momentum faded. Rate drifted lower through the main part of the overnight session, touching an overnight low of $1.6068, edging to $1.6084 ahead of the European open. Cable’s corrective pullback was tempered by euro-sterling easing away from its recent posted highs at stg0.8326 (Asia high stg0.8325), touching a low of stg0.8303 and holding heavy into early Europe. Cable extended lows in early Europe to $1.6065, with the move lower again tempered by euro-sterling slippage, the cross breaking under stg0.83 to stg0.8297. Cable recovered to $1.6094, as it tracked euro-dollar’s stronger recovery, with the cross picking up demand into its dip which saw it edge back above the figure. Release of headline UK CPI data at the expected level of 2.7% y/y had little initial impact but sellers began to emerge as the cross picked up stronger demand interest. European sovereign buys, seen Monday as well, were cited for the move back to stg0.8324, which in turn pressed cable back to $1.6057 late morning. Offers at stg0.8325/30 continue to provide decent resistance, providing cable with some buoyancy.
JPY – Dollar-yen opened on a bid tone in Asia and extended gains through the Tokyo fix to print Y89.63. However, reported comments from Japanese EconMin Amari warning that excessively weak yen has negative effects on livelihoods, spooked markets and prompted a sell off, the rate dropped back to Y88.62. Euro-yen, which had extended its recovery off NY lows of Y118.89 to $119.98 in Asia, slipped to Y118.58, but both pairs met support in the dip with stand out buying noted from CTA’s and macros as rates recovered to Y89.11 and Y119.18, however recovery momentum quickly faded. Dollar-yen opened heavy in Europe and slipped to re-test Asian lows, support in the dip aided by cross demand recovered to Y88.95. Tight range trade continued and the pair ground lower to settle at Y88.80 ahead of NY. Euro-yen tracked early dollar moves to print Y118.28, before demand nudged off lows. Support from macro names in euro-dollar extended gains to Y118.98, but momentum soon faded as fresh supply emerged taking the rate to Y118.65.
EasyForexNews Research Team