EUR – Closed in NY at $1.3374 after rate had performed an impressive recovery off earlier Asian lows of $1.3270 to $1.3388 ahead of the NY close. Rate extended its corrective pullback in early Asia, touching session lows at $1.3362 before picking up fresh demand. This buying provided the drive to take rate through that NY high and on to $1.3392 but move faltered ahead of reported decent sized offers placed between $1.3395/1.3405. However, corrective pullbacks remained very shallow and kept focus on the topside into early Europe. The move higher in euro-dollar was aided as euro-Swiss broke above key resistance at Chf1.2500, with demand for euro-yen extending this rate’s move above Y120.00 to Y120.71. Rate slowly edged through the overnight high to $1.3398 before move ran into strong sell interest, semi official a mentioned seller as rate eased back to $1.3360. The break below here allowed for a deeper move to $1.3337, with cross plays providing buoyancy in the move lower and allowed rate to edge back above $1.3350. Strong sell interest is said to remain in the $1.3400 area, though traders continue to look to buy dips, placing demand especially between $1.3330/00.
GBP – Closed in NY at $1.6004 after rate had recovered off lows of $1.5956 to $1.6010 ahead of the close. Cable eased to $1.5964 in early Asia, as rate continued to feel the downside pressure from euro-sterling extending recent gains, the cross edging on to stg0.8380, following on from Thursday’s break of stg0.8350. Cable recovered to $1.5988, as the cross eased off to stg0.8370, but the underlying negative tone in sterling remained in place, despite PM Cameron delaying his UK/EU keynote speech. Until there is clarity on the UK’s relationship with the EU going forward sterling was expected to trade with a negative tone, recent disappointing data not helping. Cable dipped to $1.5975 in early Europe before tracking euro-dollar higher, the rate touching $1.5996 before faltering before drifting off in line with euro-dollar. Real money and CTA cable sales, and UK clearer buys of euro-sterling, provided pressure on the pound, cable breaking to $1.5939, where it met Asian sovereign demand, as the cross spiked to stg0.8388 ahead of UK retail sales. Sterling was off lows into release, the weak data taking cable to extended lows of $1.5924 before that Asian demand re-emerged to edge rate back to $1.5940.
JPY – Dollar-yen made a show back above Y90.00 in early Asian trade, before heading lower through the Tokyo fix on sharp cross supply. Comments hit the wires from economic advisor Hamada that said the dollar at Y100 is good for Japan’s economy, this spiked the pair to fresh 2-1/2 year highs of Y91.20. Euro-yen dipped to Y119.80, before lifting to Y120.71 on the headlines. Late profit take sales from intraday accounts eased the dollar to Y90.03 and cross to Y120.48 as the yen pairs remained in consolidation mode. Macro sales pressed dollar-yen back under Y90.00 in early European trade, cross supply extended losses to Y89.68 and remained on the defensive. Euro-yen flirted with the intraday high before slipping with euro-dollar after the pair failed a break of $1.3400. Cross supply added further weight extending the corrective pullback to Y119.63, before dip demand cushioned moves. The yen pairs saw modest recovery gains with dollar-yen to Y89.85 and euro-yen Y119.95 ahead of NY.
Looking Ahead:
– Ahead of the US open, we hear from two central bank policy makers. At 1100GMT, ECB Executive Board member Benoit Coeure gives a speech at ICMA meeting, in Paris. At 1205GMT, UK BOE MPC member McCafferty is slated to give a speech at a Bloomberg event.
– On the other side of the Atlantic, at 1330GMT, the Canadian November manufacturing survey will be released.
– The US calendar gets underway from 1455GM, with the release of the January University of Michigan Consumer Sentiment index.
– The Michigan Sentiment Index is expected to rebound slightly to a reading of 75.0 in January after dipping in December. While the immediate fiscal crisis is over, the situation is still largely unresolved and that will like weigh on consumer’s minds, and possibly their spending.
– At 1500GMT, the December BLS State Unemployment numbers are due.
EasyForexNews Research Team