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Forex Trading: London Market Wrap

Posted by Chris Advincula on May 13, 2013 6:33:00 AM

by: Darren Walker - Market News International


May 13 Monday 10:45 GMT


LONDON (MNI) - EURO SUMMARY: Euro-dollar closed in NY Friday at $1.2989
after rate recovered off extended lows of $1.2935. The absence of any aggressive
communication out of the weekend G7, they reaffirmed their commitment to refrain
from deliberately weakening currencies through monetary policies without making
any reference to recent moves in Japan, and, along with the release of the much
rumoured piece from WSJ Hilsenrath which reported that the FOMC has mapped out a
strategy for winding down QE, acted to boost the dollar into Asian trade Monday.
Euro-dollar was marked down to $1.2969 at the open, touching an early low of
$1.2947 before settling between $1.2960/80 through the balance of the session
once Tokyo had opened and acted to quell the early volatility. Rate picked up
fresh demand into early Europe, traders noting middle east interest to sell
dollars across the board, the buying taking the rate up to extended highs of
$1.2992 before momentum faded. Rate eased to $1.2975 before getting shoved down
to $1.2952 as market reacted to repeat comments from ECB Visco suggesting
possible use of negative deposit rates if the economy was seen needing help. The
dip attracted demand, allowing rate to settle around $1.2970 late morning.

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STERLING SUMMARY: Cable closed in NY Friday at $1.5358 after recovering off
lows of $1.5315. Rate had been pressed lower through Friday's session, extending
its corrective pullback off recent highs of $1.5589, as the dollar performed a
general recovery based off improved employment data. Trade in Asia consolidated
Friday's move with dealing contained within a range of $1.5337/66, recovering
off that range low to trade around $1.5361 into Europe. Euro-sterling was
squeezed lower into early Asia as it reacted to euro-dollar's mark down into the
new session, the rate touching a low of stg0.8440 before bouncing to stg0.8452
then settling around stg0.8450 through the session and into Europe. Reported
middle eastern dollar sales into Europe provided the early lift that took cable
through its overnight high before faltering at $1.5381. Rate drifted off the
highs, the stronger pullback in euro-dollar caused by ECB Visco comments on
negative deposit rates (to be used if economically warranted) taking the rate
down to $1.5353, though euro-sterling pressed down to stg0.8432 diverted part of
the pressure. Cable recovered to $1.5379 but was drifting off again into late
morning trade.

gbp.5.13 resized 600



YEN SUMMARY: The weekend G7 meeting concluded without any aggressive
communication, reaffirming their commitment to refrain from deliberately weaken
currencies via monetary policy. Dollar-yen marked up from its NY Friday close of
Y101.62, to bring pressure on the Y102.00 barrier. Fresh demand emerged from
Japanese Interbank/Fund names taking the rate to an extended high of Y102.15
into the Tokyo open where the local market met the rise with decent offers.
Profit take sales pared light gains, supply from real money/exporters added
weight to Y101.75 and settle in a tight range. Euro-yen lifted to Y132.40 in
pre-Tokyo trade, before tracking the dollar to consolidate above Y132.00. Late
supply pressed to Y131.90, with the dollar at Y101.70. Dollar-yen extended the
corrective pullback in early Europe, slipping to Y101.54, before demand from
macro names pared early losses. Euro-yen opened flat flirting around Y132.00
before falling sharply to Y131.58 on Visco comments that said if the economy
needs further help, ECB may cut deposit rate to negative territory. The moved
dragged dollar-yen lower to Y101.52 before strong support ahead of Y101.50
cushioned. Dip demand extended the recovery to Y101.70, euro-yen to Y131.90.

yen.5.13 resized 600




Across the Atlantic, the US April Retail and Food Sales numbers are
released at 1230GMT. Retail sales are forecast to fall 0.3% in April, with motor
vehicle growth a bit slower. AAA already reported that gasoline fell slightly in
the month.



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