EUR – Closed in NY Wednesday at $1.3446 after recovering off a session low of $1.3426 seen into the London 4pm fix. A quiet start in Asia, which saw rate contained between $1.3440/55 in early trade, before it extended the base to $1.3431 ahead of the European open. Rate had recovered to $1.3340 in initial European dealing but strong sales of euro-yen prompted longs to bale taking it down to $1.3413 ahead of Germany GDP release. Germany followed France’s earlier weak release, initial react sales soaked up by profit take demand from the pre release move, but second wave showed rate under $1.3400 to $1.3382. Recovery topped out at $1.3414 before another wave of sales took rate down to $1.3373, meeting support ahead of $1.3371 (76.4% $1.3325-1.3520). Recovery to $1.3384 attracted stronger selling, the break of $1.3365 triggering decent stops that took rate to $1.3335, the release of weaker than forecast EZ GDP added to the bearish tone and took rate to an eventual low of $1.3320. Recovery efforts remained shallow and was seen keeping focus on the downside, but stronger demand is seen waiting between $1.3310/$1.3290.
GBP – Closed in NY Wednesday at $1.5538, after recovering off session lows of $1.5523. Sterling was pressed down on reaction to the BOE’s Inflation Report, though this was seen only confirming what had been in the UK weekend press, inflation overshoot in the forecast horizon, low growth with the QE door seen left open. Cable held around $1.5540 in early Asia as it consolidated yesterday’s move, survived an initial retest of the NY lows before edging to recovery highs of $1.5543. However, this correction proved short lived with rate getting pressed down to $1.5513, but reported demand placed from $1.5515 through to barrier interest at $1.5500 cushioned. Early Europe then set its sights on that barrier level, eventually overcoming Swiss demand ahead it broke to a low of $1.5493. Profit take demand quickly emerged, and with euro-sterling extending its corrective pullback off Wednesday highs of stg0.8685 on release of weak France and Germany GDP data, allowed cable to recover to $1.5532. Euro-dollar slippage weighed back on cable and dragged it reluctantly this time back below $1.55 to $1.5494, but cross slip toward stg0.8600 bounced it back above $1.5500.
JPY – Dollar-yen slipped to Y93.14 in early Asia, before strong demand through the Tokyo fix, along with BOJ candidate Iwata comments that a dollar-yen rate of between Y90-100 would return the Japanese currency to equilibrium, lifted to highs of Y93.64. BOJ policy was left unchanged as expected and the dollar consolidated early gains. Euro-yen opened heavy and ground to Y125.22, before tracking the sharp dollar move, settling around Y125.80. Dollar-yen extended in early Europe to Y93.71 on cross demand, before a turn in sentiment eroded gains to Y93.40. Trade continued light tied to a narrow Y93.40-60 range for the remainder of the session. Euro-yen opened on a buoyant tone and re-tested overnight highs, before sharp supply in euro-dollar emerged taking the rate through $1.3400. This moved weighed on the cross to Y125.40, later extending to Y125.01. Dip demand led recovery attempts before the rate headed lower again on soft eurozone GDP data, comments from Constancio on negative interest rates always possible pressed further to Y124.43.
EasyForexNews Research Team