EUR – Closed in NY Monday at $1.2955 after recovering off a late NY session pullback of $1.2924 as the market reacted positively to a Eurogroup suggestion to take small bank depositors in Cyprus out of the bail-in levy, though still expects the country to achieve E5.8bln. Rate edged to an early high of $1.2964 before turning lower, touching a low at $1.2936 before settling between $1.2950/65 through the middle part of the Asian session. Rate edged to $1.2970 ahead of the European open before it dropped to $1.2935 on reaction to a Cyprus government spokesman commenting that he doubts the levy measures will be approved. Buyers quickly emerged into the dip to take it back up to $1.2960 but negative Cyprus comment kept on the euro pressure and pressed rate to extended lows of $1.2928. Reported semi official buys lifted it to $1.2933 but another wave of selling emerged to press it down to eventual lows of $1.2916 as recovery efforts were thwarted by Cyprus comments on the forecast outcome of the vote, with a short fall of E300mln mentioned. Recovery from here was boosted on release of stronger than forecast Germany ZEW data, taking it to $1.2958 but upside momentum quickly faded with rate settling below $1.2950 late morning.
GBP – Closed in NY at $1.5106 after recovering off a late NY pullback low of $1.5088. The late recovery continued into early Asia as rate edged on to $1.5114 before bid interest faded and rate tracked euro-dollar’s corrective pullback to $1.5085. Recovery retested earlier highs before it drifted off, settling around $1.5100 into Europe. Moves in cable overnight tracked euro-dollar for the most part, the cross holding between stg0.8573/84 during the main part of Asia, before it was shoved down to stg0.8566 on a Cyprus comment suggesting the levy proposal would not gain approval. This move lower in the cross took cable up to $1.5107, but move only allowed traders to trim long sterling positions ahead of UK inflation data which took cable down to $1.5073, the cross back above stg0.8570. Release of higher than expected input/output PPI, and confirmation of forecast strong CPI, spiked cable to $1.5111, from $1.5084, with the cross pressed through support at stg0.8565/55. Second wave cable buys took rate on to $1.5136 before it drifted off to hold around $1.5115 late morning. The cross saw lows of stg0.8553 and was holding heavy ahead of NY.
JPY – Picked up fresh demand in early Asian trade that took the rate through Y95.65, the move triggered stops and provided the added momentum to lift to highs of Y95.75. Euro-yen saw a similar move, the rate edged to Y124.13 before suffering a late session reversal to Y123.41, as the euro came under general pressure on suggestions that the Cyprus parliament vote later today will reject the current levy proposals. Late recoveries to Y123.85/Y95.58 were unsustainable ahead of Europe and the pairs ground lower. Sharp euro-dollar slippage added further pressure and the cross extended losses to Y123.15, before semi-official dip demand cushioned the fall. Slightly better than expected German ZEW survey which showed an increase on the current situation briefly spiked 20 pips, sellers into the rally capped moves and the rate settled around Y123.40 ahead of NY.
EasyForexNews Research Team