By Darren Walker - Market News International
May 21 Tuesday 11:00 GMT
LONDON (MNI) - EURO SUMMARY: Euro-dollar closed in NY Monday at $1.2884
after it had recovered through the day to a NY session high of $1.2901 before
drifting off into the close. Rate picked up fresh demand in Asia, the buying
taking the rate to $1.2904 before stalling. Offers placed into $1.2905 provided
resistance and prevented stops in the $1.2905/15 area from getting triggered.
Japan Amari comments sought to clarify weekend remarks about yen correction and
prompted general dollar demand which pressed euro-dollar down to $1.2862. Buyers
emerged into the dip and allowed rate to recover to $1.2895, dipped to $1.2880
before settling around $1.2885 into Europe. Early demand into Europe lifted rate
to $1.2901 but move met decent supply sitting above the figure which countered.
The pullback initially met support into $1.2880, recovered to $1.2896 before
meeting real money supply which pressed rate to extended lows of $1.2854, the
interest seen adding to dollar longs. Demand placed into $1.2850 cushioned the
move and allowed rate to edge back to $1.2875, the recovery aided by the data
react euro-sterling rally.
STERLING SUMMARY: Cable closed in NY Monday at $1.5258 after it had seen
recovery highs of $1.5281. Rate pulled back to $1.5246, before edging higher
into the close. This late recovery extended to $1.5276 in early Asia before
Japan Amari comments, which sought to clarify weekend comments on the value of
the yen, prompted general demand for the dollar and pressed the rate down to
$1.5221. Buyers emerged into the dip to take rate back to $1.5259 before it
settled between $1.5245/50 into Europe. Euro-sterling, which had been pressed
back to stg0.8441 from stg0.8470 Monday, recovered to stg0.8455 in Asia before
settling around stg0.8450 into Europe. Cable edged up to $1.5262 in early
Europe, though recovery trailed euro-dollar and allowed the cross to pressure
overnight highs. Cable drifted back to the $1.5240 area before slipping to
$1.5210 as traders adjusted positions ahead of UK inflation data. Rate recovered
to $1.5220 into release, the softer than forecast headline number dropped cable
to $1.5184, but with recovery efforts remaining shallow turned lower again and
pressed to lows of $1.5164. Asian sovereign sales, along with US custodial cross
buys provided the main weight, euro-sterling edging to stg0.8491.
YEN SUMMARY: Dollar-yen closed in NY Monday at Y102.27, the rate having
eased off its early recovery highs of Y102.92. The pair extended this corrective
pullback to Y102.08 into early Asia before it spiked up to Y102.77 as Amari
sought to clarify weekend comments saying that excessive yen strength is being
corrected and that he hoped the FX market can strike a balance between impact on
imports and exports and find stability at a level in line with fundamentals. The
reaction saw general demand for dollars emerge but those sitting long dollars
took advantage of the move to pare back positions allowing dollar-yen to drift
back to Y102.45, settling around Y102.50. Euro-yen tracked dollar-yen moves, the
recovery tripped stops from Y132.15 which took rate to an overnight high of
Y132.30. Yen pairs opened the European session on a bid tone as traders reported
of light volumes. Dollar-yen extended the slow grind printing highs of Y102.84
after release of softer than expected UK CPI data which saw broad dollar
strength across the board. Euro-yen tracked the move but was capped by Y132.35
offers, where buy stops are noted on a break. Profit take sales pared light
gains with the dollar settled at Y102.70 and cross at Y132.30.
Across the Atlantic, the calendar gets underway from 1145GMT, when the
ICSC-Goldman Store Sales numbers for the May 18 week are due for release,
followed at 1255GMT by the Redbook Average for the same period.
Back in Europe, at 1300GMT, the Euro system's consolidated financial
statement is set to hit the wires.