- China maintains its moderately easy monetary policy
- Regional stockmarkets mainly flat despite big gains by Japanese automakers
- Oil holding around $65/bbl
- Australian June building approvals +9.3% versus +6.0% expected
- Japanese June industrial output +2.4%, as expected
EUR/USD opened in Asia at 1.4050 and dealers immediately tried to get at multiple stops below 1.4000. This attempt failed, as it had overnight at 1.4005, and many suspect that there is an option play with protection ahead of 1.4000. The subsequent announcement that China was sticking to its present monetary policy in order to promote continued economic recovery, encouraged the speculative EUR/USD shorts to bail out.
Cable managed to break below the lows from both the European and NY sessions but only marginally. There were some weak stops triggered below 1.6340 but the pair has traded quietly around its 1.6380 opening level for much of the session. Dealers mention some solid buying interest in EUR/GBP towards .8525 out of the Middle East.
USD/JPY opened at 95.00 and hasn’t managed to trade too far away from there. Early pre-fix buying in the JPY crosses saw USD/JPY touch 95.30 but a combination of Sovereign names and investment houses selling dissuaded any further gains. There is also talk that China is selling on the approach to 95.50.
Markets: Nikkei -0.15%; HK -0.6%; Kospi -0.5%; Shanghai -1%. Gold $930/oz. Oil $66/bbl.
Ranges EUR/USD 1.4008/77; Cable 1.6338/1.6404; USD/JPY 94.81/95.31; EUR/JPY 133.20/97; AUD/USD .8144/93.
