Jun. 24, 2009 (Action Economics) --
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Asia FX Summary (June 24)
Further attempts to sell the dollar in Asian trading stalled with the currencies largely consolidating ahead of the FOMC decision later in the session. EUR-USD rallied to 1.4099 but was unable to break above the NY highs of 1.4102 while Cable rallied to 1.6474, matching the NY highs but unable to trigger stops above 1.6480. AUD and NZD were well supported, but also remained under the NY highs on Tuesday. USD-JPY found support on JPY cross buying on reported investment trust fund launches aimed at attracting Japanese summer bonus allocations. This helped bolster USD-JPY to highs of 95.57, up from the early Asian lows of 95.03.
EUR-USD held a tight consolidation range under 1.4100 in Asian trading after the sharp surge in the EUR-USD on Tuesday in NY with talk that a a U.S bank bought up to EUR5 bln, helping to fuel the short-squeeze. Asian central bank, Russian and Mid East buying was seen as well. Traders dismiss many of the reasons cited for the rally, including the comments by ECB Weber, expectations of a dovish Fed policy statement and Moody's comment on U.S. ratings, which traders say that they have all heard before. Instead, the flows and thin liquidity within the current range, helped fuel gains. EUR-USD gains this morning held under the NY highs of 1.4102 and dips have been limited to 1.4064. Bids remain at much lower levels of 1.4000 with offers at 1.4120. In focus is the ECB 1Yr refi results due later today at 9:20 GMT with speculation of very strong demand to counter the Eurozone credit crunch. Central banks have also been reported as good buyers of GBP and AUD on dips as well. The rise in the EUR-USD also runs counter to the ongoing gloomy outlook in the region with the IFO institute downgrading its German GDP forecast to -6.3% from a -6.0% forecast in April and forecasting a contraction for 2010 of -0.3% while RWI Essen lowered their forecast to -6.4% compared to -4.3% predicted at the end of March. EUR-USD holds at 1.4082 currently.
GBP-USD attempted and failed to take out 1.6480 stops during the morning, with the currency bolstered by a round of GBP-JPY short-covering. The pullback was limited to 1.6423.The cross rallied to highs of 157.16, taking out stops above 156.85 and 157.00 in the process. Traders report that hedge funds were caught very short the cross after heavy selling on Tuesday. 157.50 and 158.00 are the next resistance levels on GBP-JPY. The sharp bounce on sterling today has only served to confirm the broad 1.6200-1.6600 range currently in place, with price action between those levels remaining volatile.
