EUR – Euro-dollar took out stops through $1.3155 and $1.3170 to print highs of $1.3202, but with lack of follow through pared light gains to close in NY Tuesday at $1.3180. Euro-dollar volumes were light in Asia overnight with trade tied to a narrow $1.3171-91 range. Despite strong demand in the crosses, predominantly in euro-yen, the rate only managed light gains as traders noted of strong offers into $1.3200 from macro/corporate names. Rate pared gains throughout the Asian afternoon, before support in the dip settled around $1.3180. Demand from Asian Reserve managers lifted the rate to $1.3187 in early Europe, before momentum faded. Sentiment soon turned and euro-dollar headed lower, initially on comments from ECB Praet that said growth a major risk for Europe at the moment. Sharp slippage followed to $1.3153 with traders left scratching their heads on the move, unsubstantiated rumours of a German downgrade/fat finger trade on the Xetra-Dax amongst some. Support in the dip cushioned, rate bounced to $1.3180, extending to $1.3199 on euro-sterling’s stop hunt. Strong offers into $1.3200 held and the rate eased to $1.3180 ahead of NY.
GBP – Risk appetite continued in the US afternoon Tuesday as cable bounced to highs of $1.5379, before profit take sales eased to $1.5365 around the NY close. Euro-sterling took out stops on the way to stg0.8602, later closing around stg0.8575. Cable like euro-dollar remained on the sidelines amid light Asian trade, tied to a narrow $1.5349-73 range. Rate initially slipped to $1.5353 before finding support and bouncing to $1.5370. Fresh supply added further weight taking the pair through $1.5350 but with lack of follow through recovered to $1.5360. Cable opened flat in Europe around $1.5335 and continued the quiet theme from Asia as focus turned to BOE minutes/UK unemployment data at 0830GMT. On release that saw a unanimous vote to keep the bank rate at 0.5% and 6:3 vote to leave asset purchases unchanged at Stg375bn, the rate slipped from $1.5324 to $1.5312. Euro-sterling made a show above stg0.8600 with demand seen from a major German bank, taking out a number of stops to stg0.8625. This moved pressed cable under $1.5300 to $1.5280 and sat heavy, second wave sales added further weight flushing stops to $1.5256 as the cross extended gains to stg0.8637. Cable found support and last trades $1.5270.
JPY – Dollar-yen extended the corrective pullback off earlier highs of Y98.15 and slipped through the US afternoon to close in NY at Y97.33. Euro-yen flushed stops on the positive risk tone to Y129.03, later closing around Y128.50. Dollar-yen opened on a bid tone in Asia with early demand from Japanese importers through the fix, real money extended gains taking the rate above Y98.00. Profit take sales stalled, before momentum in the cross dragged the dollar to highs of Y98.43. Euro-yen was the main driver overnight, opening around Y128.55 the cross lifted through the fix on CTA demand, Tokyo names extended gains taking the rate above Y129.10. Risk appetite continued and the pair flushed stops to highs of Y129.74, later easing to Y129.50. Dollar-yen opened at Y98.30 in Europe, before rate slipped with the cross on negative risk tone to Y97.99. Support in the dip aided recovery efforts, before fresh supply saw a re-test of the European intraday low. Euro-yen initially lifted to Y129.70, before sharp slippage on unsubstantiated market rumours of a German downgrade/large sell programme in Estoxx futures amongst others blamed for the move. Rate recovered with euro-dollar and last deals Y129.13 ahead of NY.
EasyForexNews Research Team