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London Forex Wrap

Posted by Joseph Trevisani on Feb 5, 2013 9:33:00 AM

 


Euro

February 5 Tuesday

The euro rebounded by 110 points and made a strong recovery to 1.3567 from 1.3457 in European trading primarily from the broad weakness of the yen and a softer dollar. In addition, the euro received support from the eurozone’s purchasing managers index for services which was stronger than estimated.

The final reading of the eurozone PMI in the services industry rose to 48.6 in January from 47.8 in December. The initial estimate was 48.3 published on January 24.

STERLING

The pound rose by 80 points to 1.5805 from 1.5725 in London following a better-than-expected U.K. Services PM. The rates were pushed higher as the yen fell sharply against most of its counterparties. Sterling-yen rallied by 215 points to 147.05 from 144.90.

The U.K. Services PMI rose to 51.5 in January versus the median estimate of 49.5. The previous month was 48.9.

YEN

The yen fell sharply across-the-board after the Bank of Japan Governor Masaaki Shirakawa (63) said he will step down on March 19, three weeks before his term was due and will exit at the same time as two deputy governors. Shirakawa’s resignation will likely push forward the timing of a more aggressive monetary policy easing advocated by Prime Minister Shinzo Abe.

Dollar-yen rose sharply against the dollar to 93.30 from 91.98 (+132 points) while euro-yen rose aggressively to 126.52 from 124.00 (+252 points) in Europe.

AUSTRALIAN DOLLAR

The Australian Dollar continued to fall in Europe on extended losses to the session low of 1.0378 from 1.0422 (-44 points) following the RBA’s announcement that left the benchmark interest rate unchanged at 3 percent. The comments from the RBA on the inflation outlook gave scope for further easing.

 

Chris Advincula

Market Analyst

WorldWideMarkets


 

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