Dollar-yen opened the US session at 98.38 (8:00 am ET), after trading in a range of 97.63 to 98.53 in the two prior markets. The pair saw its best levels of the day at 98.53 and 98.51 in early US action and then was dragged down by euro selling mediated through the euro-yen on talk of trouble at a French bank.
By mid-morning the cross had slipped to 127.59 and dollar-yen to its New York low at 97.93. The market returned to dollar/yen when the bank rumors were dispelled, rising to 98.32 and the cross to 128.67 just before 11:00 am ET.
Dollar-yen maintained its presence over 98 for most of the afternoon session , dipping briefly to 97.96 around 2:10 pm and 97.94 about 10 minutes later. The cross held above 128 with a short drop to to 127.77. Despite losses in US equities, the dollar retained a market preference over the yen.
The euro opened the US session at 1.3042 (8:00 am ET) after trading in a 1.3021 to $1.3074 range earlier. Rumors of a French bank in financial troubled pushed the euro down in early US action, with the pair testing lows near 1.3026 just after 10:00 am before the rumor faded and the bank stock recovered from its earlier lows. Once the rumor was squelched the euro shot higher rising almost 50 points in twenty-five minutes to 1.3077. The euro continued higher to 1.3088 just before the London and continental traders were to head home at noon in New York. The topside failure caused a brief flurry of exiting longs in the 30 minutes before the London close dropping the euro to 1.3067. But immediately after the close the euro vaulted earlier highs to post the day's high at 1.3096 before stalling ahead of offers 1.3100 and the 55-day moving average at 1.3109.
A spotty auction for the TIPS inflation indexed Treasuries and further US stock losses kept the euro defensive and the selling accelerated at 1.3070 forcing the currency quickly to its afternoon low of 1.3043 before bouncing back above the 50 level. Subsequent dips beneath 1.3050 encountered buying and the pair was bound by 1.3045-60 the balance of the session.
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