February 19 Tuesday
Following a monotonous 15-pip trading range in the Asian session, the euro traded in a narrow 45-pip range in Europe (1.3373 – 1.3328) and declined to 1.3330 despite the better-than-expected German ZEW report as the yen made gains against the major currencies.
Germany’s ZEW for Economic sentiment rose +48.2 in February which was above the median forecast of +35 and compared to +31.5 in January.
The euro rose 25 points to 1.3370 from 1.3345 on the initial reaction to the data.
European stocks rose for the first time in four days while the Bunds fell. The German DAX rose 62 points to 7,691.08 (+0.81%) and the German Bund futures fell 15 ticks to 142.61 from 142.76.
The euro’s advance was limited as the single currency still resonates a weaker tone from the comments of ECB President Mario Draghi yesterday who said that the central bank would have to assess the impact of the currency’s appreciation. Italy’s upcoming election on Feb 24-25 also raised market concerns over a possible hung parliament outcome.
The Japanese yen made modest gains against the major currencies on Tuesday after Japan’s finance minister played down talks of foreign bond purchases by the BOJ.
Japan Finance Minister Taro Aso said the government does not intend to purchase foreign bonds to end deflation by weakening the currency. This was different from the comments of Prime Minister Shinzo Abe who said yesterday that buying reign bonds exists as one idea for monetary policy.
Dollar-yen eased fell by 35 pips to 93.35 on extended losses in Europe from 93.90 in the prior Asian session while Euro-yen fell 68 pips to 124.55 from 125.23.