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Forex: U.S. Summary

Posted by Joseph Trevisani on Sep 4, 2013 4:39:00 PM


Euro

The euro began the U.S.market at 1.3173 (8:00 am), after a desultory 30 point range in Asia and Europe (1.3157-87).

For the first two hours New York duplicated European and Asian disinterest with a thirteen point range (1.3165-78), largely ignoring a 13 percent increase the July US trade deficit to $39.1 billion (expected $ 38.6, June $34.5) and a weaker August New York purchasing managers index at 60.7 following July's 67.8. The NY survey is a minor one in the ISM stable and it did show a 20 point jump from June to July.

The market also ignored higher U.S. Treasury rates; the generic 10-year gained 4 basis points to 2.90% and a strong equity performance. There has been little market impact as yet from the Syrian situation. And there was none from the relatively upbeat Fed Beige Book, which will inform the discussion at the crucial September 17th and 18th FOMC meeting.

It was the break of the day's high at 1.3187 that provided movement. The rising euro paused briefly underneath 1.3200, where sell orders had been reported yesterday but they proved to be illusory and once crossed, helped by eur/yen and cross buying, prices remained above the level for the balance of the session. The top was 1.3218. Selling interest is reputed beyond 1.3220 but that level was not tested.

Chart: Bloomberg


ScreenHunter 1728 Sep. 04 17.31

Yen

Dollar/yen opened New York at 99.48 (8:00 am) and euro/yen at 131.04. The yen strengthened initially reaching its high of 99.32 with eur/yen at its low of 130.82 a few minutes after the worse than expected trade figures at 8:30 am.

The low in dollar/yen was short-lived and it climbed steadily for the next hour and 45 minutes to 99.66.  Euro/yen rose in tandem. There was some divergence in the behavior of the two pairs.   From about 10:30 am to 11:30 am the dollar/yen dropped from 99.67 to 99.50 while the eur/yen rose from 131.22 to 131.52. The difference being the euro which shot up from 1.3168 to 1.3204 in the same period.

 

Dollar/yen stopped short of 99.85 in afternoon trading without a test of the level, indicating likely sell orders from there up to 100.00.

News that a U.S. Senate committee had approved the use of military force in Syria caused a brief 20 point plunge in the dollar/yen (99.75-99.55) but traders quickly realized that the approval was expected in the Democratic controlled chamber and dollar/yen quickly regained 99.80 and the cross returned to 131.75 from 131.52.

Charts:Bloomberg

ScreenHunter 1729 Sep. 04 17.56

ScreenHunter 1730 Sep. 04 17.57

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