The USD was held to narrow ranges through the Asian morning Thursday, while risk-sensitive assets also remained sidelined as worries continued about Greece’s debt bailout plan and the U.S. fiscal cliff situation. Overnight, U.S. House Speaker John Boehner helped to alleviate some concerns about the U.S. falling off the so-called “fiscal cliff” when he stated he remained “optimistic” that an agreement could be reached. Boehner added that President Obama’s administration must offer a proposal that has spending controls and entitlement reforms. “Recent pessimism regarding progress gave way to hopeful optimism following President Obama’s and Speaker Boehner’s comments on finding a solution,” noted Barclays Capital economists.
In response to Boehner’s remarks, the euro rallied from earlier lows near $1.2880 to highs near $1.2945, before closing around $1.2953. This morning in Asia, euro-dollar marked a narrow $1.2941 to $1.2959 range, and was last at $1.2956, not very much changed from where it had closed in New York. Dealers said the pair marked its session high early in the day but ran into sell orders believed to be sitting from $1.2980 to $1.3000. In other pairs this morning, dollar-yen was at Y82.12 just before midday here, also about unchanged from Y82.08 in late U.S. trade after a Y82.01 to Y82.21 range. Euro-yen was at Y106.37, also almost flat from last night’s U.S. close of Y106.31. Dollar-yen topped out at a seven-and-a half-month high of Y82.82 November 22 and euro-yen a seven-month high around Y107.13 Monday. “The (euro-yen’s) strong daily closing after making an intra-day low of Y105.28 yesterday suggests further up-move is likely for the next few days,” analysts said in a technical note. “Expect the immediate support at Y105.00 to hold but any upmove will likely find the resistance at Y108.15 (channel top and top of Daily Envelope) difficult to break.”
Earlier, Shinzo Abe, leader of Japan’s main opposition Liberal Democratic Party of Japan, again called on the Bank of Japan to conduct “unlimited monetary easing,” until Japan hits annual consumer inflation of 2%, local media reports. Abe’s comments, coming on the back of media reports suggesting the LDP could become become the largest party in Japan’s Lower House after the Dec. 16 elections, helped push the Japanese yen down giving yen pairs a broad lift. “The credibility of these comments is enhanced by the likelihood that he leads the next government and the leadership of the BOJ is replaced and new appointments will be made by the Diet by early-Q2,” commented analysts at RBS. “The potential changes at the BOJ are large indeed and if the follow-through over the next six months is anything like the rhetoric from Abe, yen is likely to be much weaker.”
EasyForexNews Research Team