Euro/dollar opened the US session at 1.2880 (8:00 am ET) and traded in a narrow range to the top of its European limits until the US statistics at 8:30 am. The poor jobless claims and housing starts figures (360,000, expected 330,000, housing starts -16.5%, expected -6.4%) propelled the euro 35 points to 1.2920 in under a minute. But these weak secondary statistics could not change the underlying dollar bias and the euro quickly retraced to 1.2890. Lower yields in US Treasuries produced another rally to 1.2927 where it failed to break through a short term resistance line.
The currency then traded between 1.2905 and 1.2930 and was near the high end of that range when a comments from EU Commissioner for Industry and Entrepreneurship Antonio Tajani that, "Today, the euro is too strong for our companies", were reported. The euro quickly dropped to 1.2884 but again ran out of energy as London closed. It slowly climbed back to 1.2913 over the next 90 minutes helped by a rally in dollar/yen and eur/yen. Comments from the Fed's Williams, President of the San Francisco bank, that he is open to tapering the central bank's QE program sometime in the next few months pushed the euro down to 1.2869.
“It will take further gains to convince me that the ‘substantial improvement’ test for ending our asset purchases has been met,” but if things play out as expected, “we could reduce somewhat the pace of our securities purchases, perhaps as early as this summer,” Mr Williams said, as reported by the Wall Street Journal.
Dollar-yen opened the session at 102.54 and after a quiet start saw a similar reaction to the the weak US data as in the euro, which produced an immediate and rapid sell off to 102.11. In the 8:30 minute alone the dollar/yen sank from 102.55 to 102.12. A rebound back to 102.44 met heavy selling and the pair dropped in several lurches to 101.83 by about 11:00 am, assisted by the weak Philadelphia Fed survey at 10:000 am (-5.2, expected 2.0).
A rally to 102.32 just before the London close was again met by offers but the selling into the afternoon was measured and it bottomed at 101.96 around 2:15 pm. The comments (as above) of San Francisco Fed President Williams led to a 30 point rally back to 102.36. The market then slowly consolidated betweenb 102.20 and 102.30. Japanese Prime Minister Abe is giving a speech today where he is expected to comment on fiscal and monetary policy.