EUR – Closed in NY Friday at $1.3076 after recovering off a US session low of $1.3046. The decision to penalise Cypriot bank depositors, as part of the Troika bail-out terms for Cyprus, prompted negative news reports on the euro and the knock on effects this decision would have, leaving markets to mark down euro-dollar into opening trade Monday. Rate opened at $1.2955 and was promptly pressed to early lows of $1.2905, defence of the barrier at $1.2900 drew strong demand which initially buoyed it, allowing for a brief recovery to $1.2930. This rally met fresh selling that took rate to an eventual overnight low of $1.2882, just shy of its 200-dma at $1.2873(Bloomberg), recovering to $1.2905 into Europe. The NY close/Asia open has left a glaring 120 point gap to fill which tech traders have focused on. European markets continued to try and assess if the events in Cyprus will be a contained event. Short covering eventually lifted the rate higher as Europe trading got under way, the move taking it to $1.2976 before meeting sellers placed above $1.2970. Negative Russian comments on the Troika proposals provided a counter, took rate to $1.2953 before it settled around $1.2960 late morning.
GBP – Closed in NY Friday at $1.5114 after recovering off a pullback low of $1.5076, seen after the rate had earlier seen highs of $1.5177. Risk was under pressure into the Asia open as the market marked the euro lower following the Troika’s proposal to penalise Cypriot bank depositors, with the implications should this event not be a contained event, cable was marked down to $1.5080 at the open, extended lows to $1.5061 before it spiked back up to $1.5160 as euro-sterling, which had gapped at its open from stg0.8650 to stg0.8584, extended the move to stg0.8533. Demand between stg0.8535/30 provided a base which allowed cable to track euro-dollar moves, the rate easing to $1.5072 before settling around $1.5100 into the European open. The cross edged away from its base to stg0.8562 before it settled around stg0.8540. Rightmove house price data overnight, showing a move to 1.2% from 1.1% in the annual rate, was basically ignored due to the Cyprus events. Cable edged back to $1.5144 in early Europe, found support at $1.5120 on its corrective pullback between settling between $1.5130/40 late morning. The cross settled around stg0.8570 ahead of NY.
JPY – Opened in early Europe at Y94.44 and Y121.81. Volatile start to the week for yen pairs as markets reacted to the Troika decision on Cyprus to penalise bank depositors as a prerequisite for a bail out. Dollar-yen, and especially euro-yen, were marked down at the open to the week’s trade, the former from Y95.28 to Y94.03, before it extended this move in early trade to Y93.57, while the cross dropped from Y124.58 to an Asian open at Y121.76, extending to an early low of Y121.15. Dollar-yen later recovered to Y94.99 before drifting off to Y94.33, euro-yen recovered to Y122.70 before it too drifted back to Y121.80 into Europe. The yen pairs opened on a bid tone in early Europe bouncing off Asian lows and with large gaps to fill extended the corrective pullback to Y122.90/Y94.90. Strong euro-dollar demand lifted the cross to Y123.36, the move dragged dollar-yen to Y95.15 before profit take sales pared light gains. Tight range trade commenced as the pairs remained in consolidation mode ahead of the NY open.
EasyForexNews Research Team