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Forex News Afternoon Update 14th April 2009

Previous session overview

  • The euro declined to session lows against the dollar and yen Tuesday morning, reversing a day earlier rally, following the release of disappointing US retail sales. Session lows for the euro were USD1.3227 and JPY131.70. The dollar also declined against the yen, to JPY99.50, shy of its session low of JPY99.43.
  • Sales unexpectedly plunged 1.1% in March from a month before, conflicting with recent signs of improvement in the slumping economy.  This extended an earlier unwind of riskier bets, such as in the euro from the dollar and yen. In a knee-jerk reaction, the dollar and yen typically gain on risk-averse news.
  • But the euro was already down ahead of the report, despite an upside surprise from Goldman Sachs’ first quarter earnings, which supported global equities. This may have been due to some position readjustment as European traders reentered the market following the Easter holiday. And while volumes are higher after much of Europe was off, markets are just slowly getting back into the swing of things.
  • Recently, the euro was at USD1.3241 from USD1.3376 late Monday. The dollar was at JPY99.64 from JPY100.04. The euro was at JPY131.95 from JPY133.82. The U.K. pound was at USD1.4876 from USD1.4869. The dollar was at CHF1.1435 from CHF1.1314.

Market expectation

  • EUR vs USD eases to USD1.3230 area again and below on US custodial sales. Chatter from numerous directions has mentioned semi-official bids in this pair but talk has been heard since euro based at USD1.3250 so chatter appears to be having little impact.
  • Cable finds support at USD1.4870 (61.8% USD1.4835/1.4930), as rate moves off extended highs at USD1.4930. Rate currently trades around USD1.4885. Below USD1.4870 next support seen placed at USD1.4855/50. Resistance now seen on approach to USD1.4920, more at USD1.4930, with offers reported at USD1.4945/50.
  • EURJPY breaks under JPY132.00, extending intraday lows of JPY131.90. Next band of support noted at JPY131.70/60, with a break below here to open potential for a deeper fall toward last week’s lows around JPY131.00. Traders remind that the JPY132.00 level holds the strike of an expiring option and could act to keep rate in close proximity into the run off.

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