by Darren Walker - Market News International
May 17 Friday 11:15 GMT
LONDON (MNI) - EURO SUMMARY: Euro-dollar closed Thursday's NY session at
1.2881 with early trade into Asia contained within a tight 1.2880/90 range
before the sell off in the Aussie (and Kiwi) weighed and pressed rate to an
eventual low of 1.2855 during the Asian afternoon. Rate recovered to settle
between 1.2860/65 into Europe. Rate came under fresh downside pressure into
early European dealing, the rate breaking under the Asian base before meeting
decent demand at the 1.2850 level. Talk again emerged of sovereign demand in
place between 1.2850/40, with Chinese buy interest also noted at 1.2840 ahead
of stops below. Recovery off 1.2850 gained pace on the back of middle eastern
buys, the rate edging on to $1.2883 before momentum faded. A drift off to
1.2859 met further demand which took rate to 1.2877 late morning. Trade was
described as subdued with little data of note to trade off. Offers remain in
place between 1.2890/00, traders still seeing value in selling into rallies.
Larger offers remain in place between 1.2930/50, with stops above. Weekend
positioning, as well as Bernanke speech Saturday, could provide a counter to
further euro slippage.
STERLING SUMMARY: Cable closed in NY Thursday at 1.5268 after it had
performed a decent recovery off intraday lows of 1.5197 to a NY high of
1.5322, pulling back to 1.5258 before a slight recovery into the close. Early
demand into Asia extended the recovery to 1.5282, settling during the early
part of the session between 1.5275/80 before getting pressed lower on reaction
to the heavy sell off in the Aussie and Kiwi. Rate traded to 1.5236 before
meeting support, settling around 1.5250 into Europe. Euro-sterling seen as the
main driver in cable moves, the rate having broken under support at stg0.8435/25
Thursday to a low of stg0.8421, with trade in Asia consolidating this move
between stg0.8433/40. Cable came under pressure into early Europe, easing below
its Asian base as it tracked euro-dollar slippage, but remained heavy as
euro-dollar recovered, the move taking the cross up through stg0.8440, extending
to stg0.8454 while cable posted lows at 1.5224. Cable edged to 1.5243 late
morning but recovery efforts remained laboured. BOE MPC Weale to speak at
0930GMT. Cable offers seen into $1.5250 ahead of $1.5280/85 and $1.5300. Support
1.5225/20, 1.5200/195, stops 1.5195/90. Stronger demand into 1.5175/70.
YEN SUMMARY: Dollar-yen closed in NY Thursday at 102.23 after rate had
corrected off an intraday high of 102.68. Rate came under renewed pressure into
early Asia, trading down to Y102.08 before recovering to 102.38 and settling
between 102.20/35 through the Asian afternoon. Rate took the strong sell off in
Aussie and Kiwi in its stride, despite talk of Japanese retail investors being
seen as heavy sellers of Aussie-yen. However, talk surfaced that funds were not
being repatriated and were likely heading toward high yielders like Mexico.
Euro-yen was confined to a range of 131.48/82. Dollar-yen opened European trade
on a bid tone and with broad dollar strength prevalent lifted to 102.45.
Momentum continued to build extending gains to 102.57, this move dragged the
cross through 132.00 to highs of 132.05. Profit take sales pared light gains
as yen pairs consolidated the morning move, before fresh demand gave a further
boost, stalling around 102.64/132.08. Rate drifted lower as traders await
comments from PM Abe. Strong offers seen in dollar-yen at 102.75/80, more at
102.90/95 (102.93 - 38.2% of 147.62-75.32 fall), ahead of the 103.00
The North American calendar gets underway from 1230GMT, with the release of
the Canadian April CPI numbers and the March Wholesale sales data.
The US data calendar starts at 1355GMT, with the release of the May
University of Michigan preliminary Consumer Sentiment data.
The Michigan Sentiment index is expected to rise to a reading of 78