Foreign Exchange

Friday, August 17, 2012 - 15:12

FXWRAP: Dollar Notches Slight Gains To Round Out Week

NEW YORK, Aug 17 (MNI) - Dollar was able to notch small gains vs. the euro and the yen Friday, the greenback enjoying a lift on the back of slightly better-than-expected U.S. economic data.

Euro-dollar was changing hands at $1.2325 in quiet dealings ahead of the weekend, the single currency a tad below its early $1.2356 level of the day but about the middle of the day's $1.2288/1.2361 U.S. hours range.

Dollar-yen meantime was trading at Y79.54 in afternoon dealings, within a whisker of its Y79.58 session high after beginning the day at Y79.38, its low of the day.

Afternoon dealings ahead of the weekend were sluggish at best, as were flows during morning trading outside of an early dollar rally that fizzled quickly and reversed modestly.

In that morning action, euro-dollar saw modest early chop inside a narrow range, continuing a theme from overnight, but lurched suddenly lower as selling by a model-driven account overwhelmed available liquidity, sending euro-dollar skidding lower through key levels.

Stop-loss euro sell orders were triggered below $1.2320 and $1.2300, traders said, the single currency dipping to a low at $1.2288 before regaining its poise.

In late morning and into afternoon, the euro recovered to $1.2325 before stalling and deflating slightly.

Around the same time that euro-dollar fell to its low, dollar-yen pushed to a marginal fresh high for the day at Y79.58 after stalling at Y79.49 ahead of the US session as Japanese exporter and option-related offers capped.

Pushing above Y79.50, the dollar tripped stop-loss buy orders on its way to the high, only to stall and reverse slightly.

Traders mention technical resistance around Y79.60 that should contain the pair near term while sizeable offers are in place at Y79.80 to further slow the pair.

U.S. economic data released Friday was cautiously upbeat, underpinning the dollar.

The August preliminary Reuters-University of Michigan consumer sentiment index rose to 73.6 vs. July 72.3 final reading, a slightly stronger outcome than expected.

The current conditions index rose to 87.6 vs. 82.7, expectations index slipped to 64.5 vs. 65.6.

One year inflation expectations rose to 3.6% vs. 3.0%.

The July index of leading economic indicators rose +0.4%, stronger-than-expected, with positive contributions from lower jobless claims, stronger building permits, and a narrower rate spread more than offsetting the impact of falling ISM new orders and consumer expectations.

The Conference Board said that the data points to slow economic expansion through the end of the year.


EURO SUMMARY: Opened at $1.2356 after $1.2339/81 overnight range.

-- Euro had turned modestly defensive as German bank buys to $1.2381 dried up and losses stretched to $1.2333 around the ECB fixing as euro sales vs. dollar and sterling weighed. A squeeze off lows returned euro to $1.2360 amid light flows and pair seemed set to hold nearby until model-fund selling emerged around the stock opening. Euro slipped quickly lower amid thin liquidity, flushing stops sub $1.2320/15 for lows at $1.2310 by the option cut, further selling carrying the pair through stops below $1.2300 for eventual low at $1.22881. Recovery off lows saw a pop to $1.2310 around the London fixing with extension to $1.2325 by early afternoon. Euro stalled there, deflating slowly to $1.2315 before ending at $1.2320.

YEN SUMMARY: Opened at Y79.41/98.13 after Y79.24/49 and Y97.89/98.40 overnight range.

-- Yen's defensive tone continued overnight and into US hours even as US yields steadied, damping some of the push in the dollar pair. Strong offers ahead of a Y79.50 option barrier capped dealings ahead of US hours but lure of stops above attracted, allowing dollar to press higher in wake of better than expected consumer confidence data. Despite sizeable offer at Y79.52, dollar-yen punched higher, reaching Y79.58 just ahead of the London fixing even as euro weakness dragged euro-yen to Y97.72 from morning highs at Y98.20. From there, dollar consolidated, mostly above Y79.50, while euro-yen returned gradually to Y98.00. Dollar steadied inside Y79.50/55 for the balance of the session as euro-yen held a tight orbit around Y98.00

Dollar Rates in New York Trade:

Eur-Dlr Dlr-Yen Eur-Yen Stg-Dlr Dlr-Swiss 3:02 p.m. Fri 1.2321 79.55 98.01 1.5690 0.9745 2:18 p.m. 1.2317 79.53 97.97 1.5686 0.9748 12:23 p.m. 1.2318 79.52 97.95 1.5695 0.9750 10:24 a.m. 1.2300 79.55 97.84 1.5690 0.9757 7:08 a.m. Fri 1.2356 79.41 98.13 1.5695 0.9720 3:04 p.m. Thu 1.2362 79.28 98.00 1.5735 0.9715 7:29 a.m. Thu 1.2282 79.24 97.33 1.5700 0.9778 7:31 a.m. Wed 1.2280 78.98 97.00 1.5670 0.9780 7:30 a.m. Tue 1.2351 78.54 97.00 1.5697 0.9724 7:28 a.m. Mon 1.2350 78.27 96.68 1.5700 0.9722

End 2011 1.2962 76.98 99.70 1.5535 0.9376

--email:, Tel: (212) 669-6436

** MNI New York Bureau: 212-669-6430 **


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