EUR – Closed in NY Monday at $1.3077 after rate had been pressured off session highs of $1.3319 to $1.3048 on reaction to the Italian election results. Risk positions were hit hard as the exit polls predicted a hung parliament, with Berlusconi performing well in the Senate vote. The three way vote split caused risk aversion ripples through stock markets with this tone restricting recovery efforts in the euro overnight. Euro-dollar touched an early low at $1.3053 before picking up light demand which, in the thin conditions, allowed rate to edge back above $1.3070 before stronger, private investor demand lifted rate on to $1.3089. Rate settled above $1.3080 in mid Asian trading before fresh sell interest emerged into the afternoon which punched it down to an extended low of $1.3039. Rate recovered to $1.3071 into Europe, met strong euro cross supply which pressed rate lower, moving through the Asian low to $1.3018. Bids to $1.3000 cushioned before US name demand led the recovery as rate pushed up to $1.3091. The dip to $1.3063 met another round of demand, with a US investment bank cited for taking it on to $1.3119. This rally met willing spec sellers, the supply pressing rate back below $1.3100 late morning.
GBP – Closed in NY at $1.5167 after rate had been pressured back up to $1.5200, from an earlier Asian low of $1.5073, as sterling’s recovery from its Moody’s credit rating cut lows gained a boost on the back of the outcome in the Italian election. Euro-sterling, which had seen highs during Monday trade of stg0.8815, was knocked down to stg0.8603 as risk aversion was triggered on the three way split in the Italian vote. A possible coalition of the centre left not seen sustainable and has caused a sharp pullback in global stock markets, prompting risk aversion. Cable nudged back to $1.5175 in early Asia before marking session lows at $1.5153, the dip attracting stronger demand that lifted the rate through the NY high and on to $1.5219. Rate retained most of these gains into Europe, though some early profit taking was seen pressing the rate back below $1.5200 in early trade. The corrective pullback extended to $1.5142 as euro-sterling extended its recovery off extended Asian lows of stg0.8576, the move seen driven by end month buys through stg0.8620 and on to stg0.86405. Upside momentum faded on order exhaustion, the cross easing backa round stg0.8620, in turn allowing cable to push back toward $1.5200 late morning.
JPY – Euro-yen opened on a bid tone in Asia with recovery efforts extending from late NY to Y121.36 before momentum faded, exporter sales/fund liquidation pared gains and the rate drifted back to Y120.00. Dollar-yen lifted to Y92.75 with traders noting decent demand from two Japanese banks into the Tokyo fix. Post fix the rate drifted lower again and settled around Y92.00. Yen pairs opened on the defensive in Europe and pressed to lows of Y91.40 and Y119.04 on continued reaction to the Italian election results. Euro-dollar’s failure to break $1.3000 and corrective pullback lifted the pairs, Middle-Eastern demand in euro-yen gave a further boost allowing strong recoveries to Y92.20 and Y120.74. Profit take sales pared light gains before fresh demand from a US Investment house saw a sharp rise through resistance where euro-yen printed highs of Y121.07. Late trade settled around Y120.45, dollar-yen Y92.00 ahead of NY.
EasyForexNews Research Team