EUR: Opened early Europe at $1.2933, Euro-dollar closed in NY at $1.2915 after rate had bounced from initial Spain Budget react lows of $1.2829 to $1.2928 as market perceived that the austerity measures announced would leave open the door to Spain asking for bond buy aid from the ECB without further austerity requirements. A slow opening in Asia, as market turned attention to today’s Spain bank stress test results, with early dealing contained by $1.2910/20 before marking lows at $1.2908 then bouncing. US name provided the initial lift, with two European names taking it to $1.29425. Rate drifted off the highs, with early sales into Europe extending the move with Swiss names noted sellers into $1.2922. Dip attracted strong demand with system stops triggered on the move through $1.2942 eventually took rate to a high of $1.2960. Move up aided by general demand for the euro via crosses. Strong offers appeared on the platforms at $1.2960/61 and restricted topside, allowing rate to ease to $1.2940. End month fix flows and Spain bank stress tests remain focus.
GBP: Opened early Europe at $1.6187 and stg0.7954, GBP closed in NY at $1.6236 after bouncing off a post Spain Budget announcement low of $1.6173 to $1.6244, the move tracking euro-dollar’s reaction as the cross was contained by stg0.7952/62. Cable drifted off to a session low of $1.6227 (23.6% $1.6173-1.6244) in Asia before picking up fresh demand, the recovery aided by a strong bounce in euro-dollar, the rate posting overnight highs at $1.6263 into Europe. Rate eased to $1.6251 into early Europe before fresh demand emerged to take rate up to $1.6273, the move allowing the cross to dip to stg0.7948. However, strong demand for the cross then emerged to bounce rate through the overnight high, with triggered stops through stg0.7970 taking it on to an eventual high of stg0.7992. This move saw cable pressed back to $1.6209. Sterling had pared some of its losses late morning, though was holding soft on the day. Attention turns to today’s end month ECB fix (1215GMT) with market aware that the EU CAP payment to the UK to be fixed at this time (E3.5bln approx).
JPY: Opened in early Europe at Y77.44 and Y100.13, Dollar-yen lifted on the Asian open to Y77.60 before soft data release and exporter supply weighed to Y77.52. The pair made an attempted recovery but ran into sales from a reported a major Asian sovereign. Dollar extended losses through the Y77.50 barrier and triggered large stops to Y77.435 where the rate sat heavy ahead of Europe. Euro-yen opened flat around Y100.16 before tracking sharp euro-dollar demand to Y100.34 where the rate consolidated gains, later falling with dollar-yen on Asian sovereign sales to Y100.09. Dollar-yen bounced off lows on the European open and extended the corrective pullback on cross demand to Y77.60. Risk sentiment continued and the pair was pulled higher on sharp euro-dollar gains, later stalling around Y77.69. Euro-yen largely tracked the dollar moves and climbed to Y100.67 flushing stops on the move, before easing to Y100.50 as focus remains on the month/quarter end fixings.
EasyForexNews Research Team