The euro/dollar opened at 1.3730 in the lower part of its prior 1.3709-1.3769 range. The high and low were European trades. German wholesale price data was weak falling 0.2% in November after a 1.0% decline in October. The failure at 1.3770 led to a sharp sell-off and as the currency crossed the previous intra-day low at 1.3743 it ran down about 40 points in as many minutes to the low at 1.3709.
The euro/yen touched 142.83 in Tokyo, a more than five year high, last traded on October 6th, 2008. That was a day that saw the cross open at 144.38 and close at 137.50 after touching 135.05. The pull-back from the euro/yen kept the pressure on the euro dollar through most of the European session, though there was not a direct coincident movement. By the New York open at 8:00 am ET the cross had already lost 80 points to 142.00 and was headed lower, though the euro had recovered somewhat from its 1.3709 bottom which had come two hours earlier.
U.S. November PPI, like its continental counterpart, was weak, -0.1% m/m vs 0.0%, core 0.1% m/m vs. 0.1%, and the euro generated a bounce, executing some stops above 1.3740 on the way to 1.3755, the New York high, just before 9:00 am. Falling U.S. 10 year Treasury yields may have helped the euro climb.
The euro/yen continued to fall and that along with reversing Treasury yields brought the euro off its highs and by 10:00 am it was at 1.3716 but there was no test of the bids below 1.3710 and by the London close it was back in the mid-range at 1.3738. In the afternoon it slowly declined to 1.3713 and then just as slowly climbed back to 1.3742 at the close.
ECB President Mario Draghi speaks to the European Parliament on Monday, but Mr. Draghi and other bank officials have already bruited their negative interest rate plans and his views are well known.
The main event next week is the Federal Reserve meeting on Tuesday and Wednesday. U.S. economic statistics have improved over the last six weeks but the expectation for a change of policy is muted. This is Chairman Bernanke’s next to last meeting and it seems unlikely that the FOMC voting members would choose this meeting to effect new policy.
Dollar/yen opened at 103.43 (8:00 am ET) and euro/yen at 142.01 at the time the low for the day in each currency. The cross had been the driver in Asian and European trading dropping steadily down from its five year plus high at 142.83 in late Tokyo
The cross maintained it dominance in the U.S. session and while the dollar/yen reversed ahead of the bids at 103.00 that was also when the euro/yen reached its New York low at 141.42. The recovery in the dollar/yen to 103.30 around noon saw the cross just above 141.80. The dollar/yen stayed above 103.20 for about two hours while the cross faded to 141.55 and recovered to 141.71. Both then dropped to their afternoon lows of 103.08 and 141.50 in a flurry about 2:15 pm.
The dollar/yen and the cross rallied sharply in the last 15 minutes on trading on local buying in very thin markets. The dollar/yen inclined from 103.12 to 103.30 closing at 103.21 and the euro/yen to 141.92 from 141.68 ending at 141.87.
WorldWideMarkets Online Trading
Chart: WWM Alpha Trader