Today’s highlights from the FXWW-Reuters chat-room
Once again apologies to all those awaiting access but we should have it sorted out very soon (as you know, IT stands for Irish Time 🙂 ).
– (The position was established at 1.6178 yesterday)
* Dollar-yen; Y101.00, Y101.50, Y102.00
* Euro-dollar; $1.3450, $1.3500, $1.3525, $1.3550, $1.3570, $1.3600, $1.3700,
The market value of US equity markets have seen sharp increases since the end of October despite the selloff in US bonds (Figure 1). The relative movements are best explained by the better US economic data and dovish rhetoric from the Fed aimed at delinking any decision to taper asset purchases from potential rate hikes in the future. Outside of the US, equity markets elsewhere were mixed with only Japan registering gains. The rally in euro area bond markets has persisted since the ECB cut interest rates at the start of the month as expectations for further action continues to build. The movement in US markets dominates these, however. The rebalancing of FX hedges at month-end are expected to yield a mild/modest USD sell signal (Figure 2) with the stronger signal being versus the EUR.
UsdJpy backed off towards 102.00 partly due to Nikkei paring gains and partly on the Aussie rally. Market is aware of stops placed under 101.85 coming from interbank accounts; offers lined up ahead of the 102.50-option barrier.
Very dull on the Euro front; there has been some talk of a small Asian central bank selling near 1.3610 but don’t think it is sizeable. Some banks mentioned renewed offers at 1.3590 up to 1.3620.