8 June 2001, 09:04 Asia FX Midday: GBP mixed after UK election, USD/JPY steady
Tokyo, June 8 (BridgeNews) - Cable was mixed Friday morning in Asia
with euro/sterling selling and sterling/yen selling. Meanwhile, euro/U.S
dollar fell, as Japanese investors sold the euro/yen and UK names sold
euro/sterling.
The dollar/yen eased ground after those cross yen buying. However, the
downside momentum of the dollar/yen was limited by dollar/yn buying
interest near the 120.00 area.
* * *
Currencies were mostly range bound in the Asian morning session, but
the market was choppy, with some good volumes going through. Focus was
centered on sterling after the U.K. elections, although there was plenty
going through on euro/yen. euro/dollar and dollar/yen were pushed around
by the cross rates, but dollar/yen showed a little more resilience than
euro/dollar. Australian dollar/dollar was generally well bid.
Sterling tried to bounce further as dealers anticipated profit taking
after the U.K. election. A Labour party landslide victory was well
expected and Chancellor Gordon Brown said a strong election result does
not change the euro assessment timetable. However, while it was supported
at 1.3900, Sterling/dollar was unable to go much above the overnight high
of 1.3930.
Meanwhile, the upward movement was countered by aggressive
sterling/yen selling out of Tokyo.
However, Euro/Sterling did pull-back from 0.6115 to 0.6080 on some
large selling from a U.K. clearing bank, but recovered to 0.6100. In
addition, the buying interest near the 1.3900 area provided support for
Cable.
Dollar/yen extended the overnight bounce off 119.60 with a move from
120.10 to 120.40, as 120.30 offers were soaked up by euro/yen stop-loss
hunting.
Dollar/yen dipped to 120.14 on euro/yen and Sterling/yen selling, but
appeared to find residual support from a renewed focus on Japanese
economic weakness.
Euro/dollar also extended overnight gains with a move from 0.8500 to
0.8520 on euro/yen stop-lossing above 102.30. However, the cross ran into
Japanese investor selling at 102.40/45 and euro/dollar fell to 0.8573 as
euro/yen dropped to 101.80.
Euro/yen specs were aiming for sell-stops below 101.50 after
triggering buy stops above 102.30. euro/yen has uptrend support at 101.10.
Australian dollar/U.S. dollar followed euro/dollar up to 0.5212,
before retreating to 0.5188 as euro/dollar came off. However, it later
outperformed euro, yen and Sterling as Asian and Japanese spec buyers
lifted it to 0.5213.
There are option expiries in the 0.5200-20 zone for the Tokyo cut, but
dealers see a chance of 0.5250 tonight, with buy stops rumored above
0.5220. Australia is closed Monday for the Queen's Birthday.
Japanese officials' comment and economic data failed to inspire
foreign exchange traders Friday.
The Minster of Finance Masajuro Shiokawa said there is room for gains
in the Japanese stock market, though the ministry sees volatile trading
ahead.
Shiokawa also said the government may consider steps which would be
supportive for the stock market.
For the budget, Shiokawa said a 30-trillion JGB issue ceiling for JGB
is a solid principle for the government.
Japan's Minister for Economic and Fiscal Policy Heizo Takenaka said
the Cabinet Office may downgrade its economic view in its June report.
Takenaka also said the government might revise the government target of
1.7% economic growth for fiscal 2001.
Japan's domestic wholesale price index (WPI) fell 0.6% on the year in
May, compared with a 0.7% on-year fall in April, the BOJ said Friday. The
May figure was in line with economists' average expectation of a 0.6%
fall. The BOJ has said the domestic WPI has been weakening because prices
of electric appliances have continued to drop in its May financial and
economic report.
Japan's money supply, as measured by M2-plus-certificates of deposit
(M2+CDs), was 648.8 trillion yen in May, up 2.9% from a year earlier, the
Bank of Japan announced Friday. The May growth was better than the market
outlook of a 2.8% gain. The May figure was the highest end of the BOJ's
outlook of the April-June M2-plus-CD growth between 2.0% and 2.9%.
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