EUR – Closed in NY Tuesday at $1.3580, off late Europe highs of $1.3598 that was seen after rate had spiked higher on a story suggesting current strength of the euro will not effect Thursday’s ECB rate decision. Rate continued the consolidation, seen through the NY afternoon into the Asian morning between $1.3570/95. Early Europe broke rate under $1.3570 to $1.3561, with second wave sales extending the move to $1.3513. Pressure was seen from the crosses as traders pared long euro positions ahead of Thursday’s ECB rate announcement and ECB Draghi’s press conference. Demand in the area between $1.3520/00 managed to cushion the base and allowed rate to recover to $1.3549 before it settled between $1.3518/42 through the balance of the morning. Rate was last trading around $1.3525. Germany factory orders at 1100GMT the main data interest on the day though not expected to provide any major reaction ahead of Thursday’s events. MNI ECB source story noted Tuesday, some traders suggesting we could see another one from a NY think-tank during this afternoon, though no confirm for this.
GBP – The corrective pullback off UK services PMI react highs of $1.5805 Tuesday extended to $1.5630 in NY, the rate closing the session at $1.5663. This sharp reversal in cable was again seen driven by euro-sterling, the rate reacting to a strong euro reaction to a story suggesting that ECB members don’t see the current strength of the euro as having a significant impact on monetary policy. The cross, which had pulled back from Friday highs of stg0.8717 to stg0.8555 Tuesday, bounced to stg0.8688. Cable in Asia consolidated the pullback between $1.5650/65, while the cross was contained by stg0.86625/0.86795. Cable came under renewed pressure into Europe, the rate pressed down to $1.5632, but traders noted strong demand placed into $1.5630, the level seen as long term trend line support off 2009 lows. Cable recovered, the move squeezing spec shorts as traders adjusted positions as some suggested BOE Governor in waiting Carney may not be as dovish as some forecast when he stands in front of the TSC Thursday. Euro-sterling extended its pullback off stg0.8688 to stg0.86315. The pound was off best recovery levels late morning.
JPY – Dollar-yen opened heavy in Asia and slipped to Y93.46, the move quickly attracted fresh demand ahead of the Tokyo fix and recovered to Y93.85. Risk appetite continued and the pair extended gains through barrier interest at Y94.00 (Y93.99 – 38.2% of Y124.14-75.35) to Y94.06. Euro-yen tracked dollar moves, the rate extended to Y127.71 during the Asian afternoon, before profit take sales pared light gains. Dollar-yen remained in consolidation mode with trade tied to a narrow Y93.61-93 European range. Traders note barrier interest seen on the topside at Y94.25 and Y94.50 with strong offers sandwiched between at Y94.30. Euro-yen opened soft and slipped with euro-dollar on Swiss name supply to Y126.80, fresh sales addded further weight and pressed to Y126.53. Strong support ahead of Y126.50 cushioned, before demand from corporate names aided recovery attempts back above Y127.00. The underlying tone remained heavy and the rate squeezed lower in late dealings to Y126.60, dragging the dollar to Y93.61.
EasyForexNews Research Team