Previous session overview
The euro rose modestly against the yen and dollar in Asia Monday, as stronger regional share markets encouraged short-term players to buy the risk-sensitive common currency.
If global share markets remain firm this week, the euro could continue edging up, traders said.
In Asia Monday, regional bourses strengthened, with China’s benchmark Shanghai Composite Index up 1.60% midday and Japan’s Nikkei 225 Stock Average up 1.0%. That came after the Dow Jones Industrial Average’s closed up 1.0% Friday, which boosted the euro against its rivals.
But while the dollar fell against other rivals Monday, it gained slightly against the yen, trading hands at JPY93.15 at 0450 GMT compared to JPY93.03 late Friday in New York. Short-term players were buying the currency, prompted by the stronger regional equities and a rise in U.S. long-term interest rates, with the benchmark 10-year Treasury yield up to 3.43% Friday.
Better than forecast US jobs data, along with an absence of talk about a coordinated withdrawal of stimulus measures at the weekend FinMin G20 meeting (with the US expected to lag others in this eventual move) allowed euro-dollar to edge to overnight highs at USD1.4337 with pressure remaining into early Europe, the rate extending the move to USD1.4339.
The British pound remains steady vs. the dollar after the US jobs report for August. The pound’s steadiness can also be attributed to British construction Q2 output volume falling by 0.5% which is a vast improvement from the estimated 2.2% decline, prompting speculation about a possible upward revision to GDP in the quarter.
The Australian dollar continue to break loose from its recent trading range Monday, breaching its highest levels in a year as firmer equities and investor appetite pushed the commodity currency into new terrain.
The euro is gaining against the U.S. dollar, UK pound and yen in rising along with stocks, though major pairs were still confined to their well-established summer ranges.
For EURUSD offers seen placed toward USD1.4350, and traders suggesting a fading toward this level on any extended rally. Above here and further offers seen placed toward USD1.4380. Traders remind that the USD1.3950/1.4450 dnt structure remains in place (matures Sep17) and expected to draw protection if either side threatened. Bids USD1.4290/85, a break of USD1.4280 to open a deeper move toward USD1.4250 ahead of USD1.4220 with stronger interest remaining in place around USD1.4190 (Friday low USD1.4191).
Dealers are focused on a raft of top tier domestic data due later this week, including retail sales and employment numbers, which could make or break a case for an October rate hike by the Reserve Bank of Australia.
Players will be watching U.S. Treasury auctions totaling USD70 billion this week for cues on interest rate moves, dealers said.
European stocks are expected to open higher Monday, following a solid finish on Wall Street Friday and an upbeat session in Asia Monday, after Friday’s U.S. employment data pleased the market.