EUR – Closed NY Wednesday at $1.2973, just off lows at $1.2970, after rate had been sold off on general dollar strength (reaction to strong ADP data) as well as position adjustments ahead of today’s ECB rate decision/Draghi press conference. Lows extended to $1.2965 into early Asian dealing, as market probed for stops below the recently posted 2013 low at $1.2966 (Mar1). However, the early dip encountered demand interest which allowed rate to recover through the balance of the session to $1.2997, trading around $1.2992 ahead of Europe. The move up in Asia was aided by S&P changing outlook for Portugal to stable from negative, though met headwinds as Dallas Fed Fisher was reported saying ‘things in Europe are very bad right now.’ Rate initially eased to $1.2984 in early Europe before fresh demand, via crosses, spiked rate to an initial high of $1.3014, with continued short covering edging it to $1.3030. A well received Spanish auction provided the boost to take rate on to challenge strength of resistance in the $1.3040/45 area, touching $1.3044 before slowly easing away. Focus on ECB rate decision, then ECB Draghi press conference (1245-1330GMT), most expecting no change in rates, but again expect dovish comments.
GBP – Strong ADP release Wednesday, along with position adjustments of long sterling positions ahead of today’s BOE rate/QE decision saw cable under pressure through the NY session, trading to extended lows of $1.5014 into the close. This move extended further as Asian traders reacted to an FT report suggesting Chancellor Osborne to announce further powers to incoming BOE Governor Carney at the Mar20 Budget. Options include giving the MPC greater time to bring inflation back to the 2 per cent target, giving the BoE a Federal Reserve-style dual mandate to target both employment and inflation, and even targeting cash spending in the economy rather than inflation. Rate dropped through recent lows of $1.4985 to $1.4965 but met decent demand linked to option interest ahead of $1.4950. Rate recovered to $1.5013, holding $1.4995/1.5010 into Europe. This Asian recovery was reversed into Europe, the rate pressed down to $1.4967 as a UK clearer bought euro-sterling up to stg0.86975 (Asia stg0.8637/72). Cable managed to recover to around $1.5000 late morning as it tracked euro-dollar recovery and the cross met resistance ahead of stg0.8700. BOE at 1200GMT, rate expected unchanged though QE extension a possibility.
JPY – Dollar-yen touched a recovery high of Y94.11 in NY Wednesday as the dollar was driven higher on react to a stronger than forecast US ADP data (upside revisions also noted for Jan), and seen supporting positive calls for Friday’s NFP. Rate drifted back toward Y94.00 into the session close with early Asia extending move to Y93.82 on reaction to the unchanged BOJ (no surprise) though it did include an upbeat view on the economy. Rate recovered to retest the NY high at Y94.12, eased to Y93.80 before settling around Y93.90 ahead of the European open. Similar story for euro-yen, the rate touching a high in NY of Y122.28 before reversing into the close to Y122.00, with early Asia extending this move to Y121.77, on early euro weakness before rate recovered to Y122.16. An afternoon drop back to Y121.86 then saw rate recover back Y122.00 ahead of Europe. Asian traders noted demand in place at Y93.75, with main sell interest seen into Y94.50. A break of this latter level to expose recent highs at Y94.77 (Feb25). Euro recovery in Europe saw euro-yen extend its recent recovery to Y122.85, the move taking dollar-yen up to Y94.24 with both rates holding firm late morning, though just off best levels
EasyForexNews Research Team