EUR – Closed in NY Friday at $1.3194 after recovering off a session low of $1.31445, opening Wellington at $1.3177 before the recovery extended in early dealing to $1.3235. The opening enthusiasm wilted and rate began to drift lower. Rate eased to $1.3185 before settling around $1.3200 into the Tokyo open. Rate eased again, extending the pullback to $1.3182 before fresh demand emerged to edge it back to the $1.3200 area ahead of Europe. Strong Germany Ifo Friday, following on from a strong ZEW earlier in the week, was seen providing some euro positives, along with the euro seen as non participant in the ‘currency wars’, but the Italian elections (currently in process) and Friday’s reported lower than expected LTRO2 repayment was seen providing potential negative headwinds. Moody’s overnight commented that the EZ growth forecast reduction is credit negative failed to add to any negative weight as rate continued to recover through the European morning, aided by cross led demand. Rate managed to edge above initial highs of $1.3250 late morning, though progress was seen laboured. Rate touched an extended high at $1.3254 and was holding firm ahead of NY.
GBP – Closed in NY Friday at session lows of $1.5162 after rate had dropped from around $1.5250 on news that Moody’s had cut the UK’s sovereign rating from AAA to AA1 (stable outlook). Negative press reports over the weekend saw the pound under pressure into opening Asian trade (Wellington). Cable was marked down to $1.5135 at the open with sales in a thin market extending the move to a low of $1.5073. Euro-sterling spiked up to stg0.8701 into Friday’s close with this rate pushed up through recent highs of stg0.8764 to stg0.8775 before Tokyo opened. The pullback in the cross to stg0.8711 allowed cable to edge back up to $1.5137. A brief dip to $1.5116 attracted fresh demand that took rate to extended highs of $1.5139 ahead of Europe. The Asian open left a gap in the charts to $1.5162 which became an early target into Europe, the rate edged to $1.5163 before meeting offers between $1.5160/65. Rate settled between $1.5130/55 for the balance of the session. The cross recovered to challenge the stg0.8750/60 area (61.8%-76.4% of stg0.8775-10) with reports of major Swiss name buys providing the main drive. End month demand, along with a Monti win in Italy, could provide further upside pressure in the cross during the week
JPY – Dollar-yen and yen pairs gapped higher into the Asian open Monday as traders reacted to weekend press reports that suggested current ADB Kuroda was seen as a front runner for the BOJ Governorship, with Iwata seen as one of the deputies. Dollar-yen closed in NY at Y93.42, gapping at the Asia open to Y93.89 before extending its rise to Y94.77, euro-yen closed NY at Y123.22, gapped to Y123.90 before it too extended gains to Y125.37. Both rallies met stiff resistance from retail and Japanese exporters which countered the extended reaction, with dollar-yen easing to Y93.97, euro-yen to Y123.90. Profit take sales continued into Europe as dollar-yen extended the slow grind off earlier highs to Y94.05. Fresh supply added further weight through Y94.00, the rate posting lows of Y93.77 before Middle-Eastern demand cushioned moves. Euro-yen tracked the dollar and eased to Y124.09, before recovering to Y124.40 on Swiss bank demand in euro-dollar. The yen pairs later settled in tight ranges with the dollar at Y93.90 and euro-yen Y124.45 ahead of NY.
EasyForexNews Research Team