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.
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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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