EUR – The cross closed in NY Friday at $1.3052, after easing off a session high of $1.3130, with rate marked higher into early Wellington on the back of expected euro-yen demand (following no censure from G20 on Japan for recent monetary policy moves), as well as Italy eventually re-electing president Napolitano, which is expected to bring about some political stability in the EZ third biggest economy. The rate spiked to $1.3117 in thin conditions before dropping back to $1.3039, bouncing to $1.3094 before the main Asian session opened. Rate eased to $1.3054, where it met decent demand in the area between $1.3060/50, edging back to $1.3084 before drifting back to $1.3064 ahead of the European open. Rate came under another round of downside pressure into early Europe, the rate testing support at $1.3050 before bouncing again, touching $1.3076 before seeing a stronger reversal. Rate triggered stops through $1.3039 which took it to extended lows of $1.3032 before reported demand into $1.3030 cushioned the move and rate recovered back around $1.3050 late morning. Little on the data calendar with market focus set on Tuesday flash PMI’s and Germany Ifo. Rate seen contained by $1.3030/20-$1.3080/85.
GBP – Cable closed in NY Friday at $1.5231 after rate’s corrective pullback off earlier $1.5368 highs was given added weight through the London fix, with Fitch providing a further shove as it downgraded the UK’s rating to AA+ from AAA (a move widely expected though still prompted a negative response). Rate was marked higher into early Wellington, the rate tracking euro-dollar’s mark up, but the move quickly attracted sellers which eased it back toward the NY close into the main Asia open. Selling continued, the rate eventually touching a low of $1.5202 before buyers emerged which took it back up to $1.5246. Rate slowly eased off this recovery high, settling around $1.5230 ahead of the European open. Euro-sterling, after seeing lows Friday of stg0.8503 was pushed back up to stg0.8582 on the mentioned late sterling weakness/Fitch reaction, with trade through Asia held between stg0.8578/92, resting on the lows into Europe. Cable came under further sell pressure into Europe, the rate pressed to lows of $1.5211, while the cross edged toward overnight highs. Cable picked up fresh demand into the dip, while the cross reversed to stg0.8555,
which in turn saw cable revisit $1.5246 late morning.
JPY – Early demand into Wellington took advantage of thin conditions to advance the recovery to Y99.90 but strong sell interest placed between Y99.90/100.00 provided stiff resistance. Dollar-yen eased through the Tokyo fix but as G20 members refused to criticise Japan’s weakening of the yen through it’s monetary policy program, rate re-tested the intraday high. Once again the pair met strong resistance, this pressed to Y99.59 as it looked to close a small gap left from the NY close/Asia open, before dip demand from Asian names settled around Y99.80. Euro-yen initially lifted to Y130.70, before tracking the dollar to Y130.10, dip demand bounced ahead of Europe to Y130.35. Dollar-yen was tied to a narrow Y99.63-85 European range, slipping on euro-yen’s break of Y130.00 to Y99.63, before demand cushioned allowing a recovery to Y99.80. The cross opened heavy and slipped to Y129.88 on sharp euro-dollar sales, before lifting back above Y130.00, later extending the recovery to Y130.30 ahead of NY. Focus remains on dollar-yen and a break of the key Y100.00 level with traders reporting of strong sell interest on approach.
EasyForexNews Research Team