EUR – Closed in NY Monday at $1.3515, the rate having continued its corrective pullback off Friday’s post US payrolls highs of $1.3711 through Monday’s session as markets pared longs on political concerns in Spain and Italy. Rate touched a low of $1.3505 before recovering into the close. Rate edged to $1.3521 into Asian trading before turning lower again, the break below $1.3500 allowing it to grind its way to extended lows of $1.3481, holding heavy into Europe. Early Europeans targeted stops sub $1.3480, the break taking rate to an initial low of $1.3462 before getting a lift back to $1.3482. Second wave sales extended lows to $1.3459 but ran into strong Asian sovereign demand that cushioned then lifted rate back toward $1.3500. Release of stronger than forecast Spanish services PMI provided a pre-cursor for generally strong EMU releases, which along with middle eastern buys of euro-yen, took euro-dollar above $1.3500. German and EMU PMI allowed rate to extend to $1.3540, with triggered stops above taking it to a high of $1.3548 before faltering. Rate drifted lower, release of soft EMU retail sales taking it to $1.3514 (38.2% $1.3469-1.3548) where it met support.
GBP – Closed in NY at $1.5762 after rate had extended its recovery off Monday’s lows of $1.5683. The rate had seen the main downside drive Friday on euro-sterling as it was driven to highs of stg0.8711, the corrective pullback in the cross through Monday seen on general paring of long euro positions on Eurozone political concerns. The cross traded down to stg0.8569 which in turn allowed cable to push up to $1.5772 ahead of Monday’s close. Euro-sterling continued to take direction from euro-dollar in Asia, extending lows to stg0.8555, the move again providing buoyancy for cable as it countered the negative effect from euro-dollar’s continued slide. Cable was held between $1.5745/67 in Asia, the cross by stg0.8555-78. Cable broke below its overnight base in early Europe as rate tracked euro-dollar’s early slippage, meeting support at $1.5728. Strong recovery in euro-dollar took the cross through overnight highs, but resistance between stg0.8580/90 stalled the move and allowed cable to play catch up. Cable retested Monday’s recovery high at $1.5772 before extending to $1.5780 into UK svcs PMI. Strong data punched cable to $1.5805 before stalling, settling around $1.5780 ahead NY.
JPY – Opened in early Europe at Y92.26 and Y124.23 Stops below Y92.20 became the early target in Asia, the triggered sales taking the rate to an extended low of Y91.98 before strong Japanese demand emerged into the dip. Rate recovered to Y92.56 before getting knocked back post Tokyo fix. Euro-yen opened heavy and extended to Y124.18, the dip quickly attracted buyers with recovery able to touch Y125.01. Failure to build above Y125.00 saw rate drift lower again later settling around Y124.55. The yen pairs ground lower in early Europe with dollar-yen printing lows of Y92.12 and euro-yen Y124.01. Yen sentiment turned and the cross tracked euro-dollar’s extended recovery on Asian sovereign demand to Y124.80. Momentum continued, rate flushed stops through Y125.00 and Y125.50 on stronger than expected Spanish/German PMI data to Y125.97, demand from Middle-Eastern names also seen attributed to the move. Demand from European real money alongside sharp moves in the cross lifted the dollar to Y92.80. Early departure headlines for BOJ governor Shirakawa extended to Y93.05, later easing to Y92.90
EasyForexNews Research Team