12 March 2001, 12:56 Europe FX Opening: Summary of overnight moves and what's ahead
By Bridge News
London--March 12--The following is a summary of overnight moves since
Europe's close, plus possible leaders for the session ahead:
KEY ISSUES:
* JPY back under pressure as Nikkei drops, Mori stays on for now
* USD/Europe trapped between weaker US technology stocks and stronger US
data * Eurogroup/Ecofin/G10 meetings
The JPY was a major loser overnight despite an above forecast rise in
Japanese Q4 GDP (seen as historical). The USD gave up a large part of the
gains made following Friday's strong jobs figures, undermined by a drop in
the Dow and US stock futures.
--USD/JPY broke out of Friday's narrow ranges to hit a 20-month high
of 120.68 as the JPY was undermined by 457 point fall in the Nikkei and a
denial by Prime Minister Mori of reports late last week that he was to
resign over the weekend--seen as prolonging the current situation. An
above forecast, 0.8% quarter on quarter and 3.2% year on year, rise in
Japanese Q4 GDP had little impact, but the pair was taken higher on buying
from Asian names and Japanese investment accounts and pushed to the high
after interbank players' stops were hit above the 120 figure. The
triggering of a sizeable, 120.50 strike, option had little impact. Finance
Minister Miyazawa described the figures as good, but said he wants to see
an increase in personal consumption after Q4 consumption fell a seasonally
adjusted 0.6% on the quarter.
--EUR/JPY followed the pair higher, hitting a near 2-month high of
112.59.
Profit taking sales from US players were seen above 120.40
--The USD gave up a little ground, reacting to a 214 point fall in the
Dow and weaker US stock futures. Though USD/Europe markets also know that
Friday's US payrolls data points to the possibility that the economy may
not be as weak as some thought and might aid the USD a touch. EUR/USD came
off Friday's 0.9293 low to hit an intraday high of 0.9337 toward the Asian
close while USD/CHF fell from the 1.6585 region to touch an intraday low
of 1.6504. In a Westfalen interview, BBK President Welteke said that with
euro zone inflation at 2.6% it is too early to talk of rate cuts, despite
rates elsewhere moving in another direction. No US or important euro zone
data is due out during the day, though Eurogroup Chairman Reynders and EU
Monetary Affairs Commissioner Solbes give a press conference at 0800 GMT,
ahead of the 0830 GMT start of the EU15 finance ministers' meeting. The
Federation of German banks presents its survey on the German economic
outlook at 1000 GMT while G10 central bankers hold their monthly meeting
in Basle.
--Cable came off Friday's low around 1.4615 to touch 1.4700 in early
Asian trading as the USD slipped back. UK February PPI is released at 0930 GMT.
EUR/GBP dipped back from Friday's 0.6380 high to the 0.6325 region.
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