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New York Summary: Bernanke Buys the Euro

Posted by Joseph Trevisani on Jul 11, 2013 4:04:00 PM

The euro opened at 1.3060 against the dollar at 8:00 am ET and slipped to 1.3041 just before U.S. jobless claims at 8:30 am. The weaker than expected result (360,000 vs. 340,000) boosted the currency to 1.3069 but it reversed quickly, spending barely three minutes above 1.3050, and then sifted down to the day's low at 1.3006 by 9:00 am aided by selling in the euro crosses. The Labor Department noted that July's claims are difficult to adjust for the seasonal factory closing in the auto industry.

Good buying interest at 1.3000, a combination of profit taking shorts from earlier and new positions pushed the rate back up to 1.3040, but it fell back to 1.3015 with the crosses, primarily eur/yen leading and then reversed and made a quick 20 minute run at 1.3070.

Failure there kept the euro in a choppy 1.3016-1.3064 range until about 10 minutes to 3:00 pm. This was the first return above 1.3060 since the initial failure around 10:30 am and the result was very different. The euro shot ahead powered by stops clearly placed after the first attempt at 1.3070, touching 1.3118 in ten minutes. The burst higher took place as the yield on the 10-year Treasury completed a drop from the day's high of 2.61% to 2.57%. The balance of the session  was spent in a tight range around 1.3100. 

The euro remains well supported by Fed Chairman Ben Bernanke's statement yesterday that the central bank has no intention of quickly ending its quantitative easing program.


Charts: Bloomberg

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ScreenHunter 1427 Jul. 11 16.56




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