- Combined intervention last Friday sold Y530 billion, much less than the Y2 trillion which the market had guessed
- World Bank: China heading towards being world’s largest economy, and Yuan a reserve currency
- New Zealand Q4 current account balance -$NZ 3.5 billion
- Nikkei -0.8% after being -2% in early trade. Shanghai +0.8%.
- Oil $105.25/bbl, Gold $1428/oz
Another quiet session with not much to report except some stop-loss hunting in the EUR pairs.
EUR/USD closed in NY at 1.4200 but sentiment was already turning bearish after issues surrounding Allied Irish Bank and also the Portugese austerity conditions. Sovereign names had been noted buying in NY near 1.4175 but when they didn’t appear in early Asian trade, stops below 1.4170 became easy fodder. These were followed by stops in EUR/JPY below 114.50 and in EUR/GBP below .8660, all of which combined to send EUR/USD to a low of 1.4150. There has been a slow and gradual recovery since then. Ranges: EUR/USD 1.4150/1.4202, EUR/CHF 1.2787/1.2832, EUR/JPY 114.42/115.02
Dealers were of course wary of possible BOJ activity but when the Nikkei fell 2% immediately on open and when EUR/JPY stops were triggered, any thoughts of a move towards 82.00 were quickly forgotten. Ranges: 80.81/81.07
AUD/USD fell quite sharply on the usual risk-aversion plays alongside the Nikkei but it has also recovered very nicely through the afternoon to finish the session unchanged. Ranges: 1.0062/1.0113
Traders tried to trigger stops below 1.6340 in the cable but they encountered quite strong bids at that level. The subsequent short-covering has seen the pair regain all the early session losses. EUR/GBP has had a mild bearish tone throughout the session. Ranges: Cable 1.6340/83, EUR/GBP .8654/74