The dollar opened in Asia at Y82.24 and traded a narrow Y82.21-38 range
City Index March 8, 2011 12:30 PM
<p>USD/JPY Range: 82.21 – 82.39 Support: 81.70 Resistance: 82.80 The dollar opened in Asia at Y82.24 and traded a narrow Y82.21-38 range. Offers remain […]</p>
The dollar opened in Asia at Y82.24 and traded a narrow Y82.21-38 range. Offers remain in place towards Y82.50 with stops through Y82.60 and Y82.75. Bids are placed at Y82.00 from importers and investors, and layered down to Y81.50 with some stops intermingled at Y81.90/95. Euro-yen was equally uneventful opening at Y114.87 and ranging Y114.80-Y115.16, with bids from Y114.85 down to Y114.50 and stops placed on a break of the latter. Offers reside from Y115.60 up to Y116.00 with stops above. Sterling-yen opened at Y133.24 ranging Y133.12-49 in quiet trade with support at Y133.00 and some stops set on a break of the level.
Early downside pressure was seen as a reaction to a Fitch report on China, suggesting the banking industry here could see a crisis by mid-2013. However, this report was countered by an unsubstantiated leak of China CPI (due release Mar11, expected 4.8%) at 4.4%. This low call on China inflation provided risk a boost and took euro-dollar to overnight highs at $1.3989. Rate had eased back to $1.3965 ahead of the European open, picking up a fresh bid tone into this session that has lifted it back to $1.3975. Offers seen placed between $1.3990/1.4000 (medium term accounts profit take interest), a break above $1.4005 to open a move toward $1.4015/20. Above here and $1.4036 moves into view with Asian sovereign sales expected to emerge again ahead of $1.4050. Support $1.3950/40, stops $1.3940/30.
We are closing in on the Bank of England’s rate decision on Thursday. A hike is really the only outcome that can boast the sterling. Otherwise, a hold will likely find the BoE holding to its policy of not releasing a statement when they leave policy undisturbed. That said, there will be another month before the central bank would likely weigh the necessity of tightening policy once again. That will draw a sharp contrast to the ECB’s accelerated time frame and wear on speculators’ already-frayed nerves. And, to make things just a little more difficult on the bullish outlook, the Treasury had announced it had elected Goldman Sachs’ Chief European Economist Ben Broadbent to replace MPC member Andrew Sentence at the end of his term on May 31st. If we don’t get a hike before then, the hawkish voice from the policy group will die down significantly.
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