EUR – Early Asian trade was confined to a tight range around $1.3000 before euro-yen sales pressed euro-dollar back to that NY pullback low of $1.2988 before bouncing to $1.3006. Rate then settled around $1.3000 through the balance of the session. Focus was turned toward the release of Germany Ifo, with market seen positioned short for another weak release, basing this on Tuesday’s release of disappointing Germany flash PMI data. This early selling pressed rate to $1.2982, recovered to $1.2997 before easing to $1.2992 into Ifo release. The weak headline number, 104.4 vs forecast 106.2, dropped rate through $1.2970, with triggered stops taking it down to lows of $1.2955. Recovery met resistance ahead of $1.2980, but reports of sovereign buying extended this correction back above $1.3000 and on to fresh intraday highs of $1.3018, before settling between $1.3005/15. The weak German data has prompted further speculation that the ECB could cut rates as soon as next week (May2), though others suggest this would have little real economic effect which could defer.
GBP – Cable closed Tuesday in NY at $1.5240, having retreated from a NY recovery high of $1.5288 to a low of $1.5233 before edging higher into the close. Trade in NY basically tracked euro-dollar moves, with trade into Asia following the same pattern. Rate was initially squeezed to a low of $1.5227 before it eventually edged up to challenge resistance at $1.5250. Failure here prompted spec longs to trim back ahead of the European open/BOE FLS announcement, touching $1.5232 before settling around $1.5240. BOE FLS announcement confirmed what had been suggested in the UK press. Talk that market could see dividend cable demand emerge over the next four sessions provided the rate with an underlying buoyant tone through early European morning trade, supporting while euro-dollar dropped lower on reaction to weak Germany Ifo data, which in turn took euro-sterling to extended lows of stg0.8500. Recovery in euro-dollar on reported Chinese demand also lifted cable, the rate pushing up to highs of $1.5284 while euro-sterling edged back up to stg0.8515. The suggested dividend cable demand likely to provide buoyancy though traders will be wary of Thursday’s upcoming UK Q1 GDP with reports full of pessimistic forecasts.
JPY – USD closed in NY Tuesday at Y99.48, just off session highs of Y99.53 and able to recover well after the market reacted to an inaccurate Tweet from AP. This recovery continued into early Asia with stops above Y99.50 targeted and triggered to take rate on to Y99.76. Move saw momentum quickly fade with rate easing down to Y99.19, the reversal aided by two European names reported to have sold heavily back through Y99.50, with weak longs squeezed out on the move below Y99.30. Euro-yen saw an overnight high of Y129.70, the rate extending its recovery off Y128.19 NY lows, later settling around Y129.20/30. Early demand in Europe lifted the cross to Y129.60, before profit take sales pared light gains, rate extended the slow grind to Y129.30 ahead of German IFO data. A soft release pressed through Y129.00 in tandem with euro-dollar to print lows of Y128.82. Dollar-yen initially lifted to Y99.72 but soon came under pressure with supply from the crosses, demand from an Asian directional name briefly cushioned, before extending losses to Y99.41. Strong support in the dip aided recovery efforts as the yen pairs saw sharp gains to Y129.64/99.62, later easing to sit mid-range ahead of NY.
EasyForexNews Research Team