After an overnight run higher showed promise for the Euro, the single European currency’s progress was halted by stiff resistance near the 1.2150 level in Asian trade. Markets in Asia followed the optimistic tone of today’s firm equities in the US, pushing risk higher as fears over Europe were calmed by earlier ECB statements that promised a continuation of emergency bank loans until the end of the summer. EU members also talked about an abundance of capital on hand through the current EU/IMF rescue package that would enable any potential “fire” to be put out quickly. The EUR/USD capped three straight days of gains at 1.2147, just under a supposed mother lode of offers near the 1.2150 mark in this pair.
Yen crosses rose with the EUR/JPY topping 111.20, and the GBP/JPY touching 134.95 on highs as the Nikkei 225 rose over 1.0% to end the week. USD/JPY rose on the weaker yen to 91.75 although still relatively quiet in a 50 pip range. The AUD/USD was able to ride the risk wave to top 0.8500 but was unable to hold gains late in the day, dropping almost 60 pips heading into London. Data out of China which was leaked early on was generally good, but showed signs of the Chinese economy overheating, allegations which were shot down by officials of that nation. Solid Chinese trade balance yesterday helped to increase optimism that the global economy is alive and kicking as was translated by the monster gains earlier in US equities.
Retail Sales end the week with a bang in New York later in the day and next week begins with a holiday in Australia in celebration of the Queen’s Birthday. As well, my recollection of the last World Cup in South Korea and Japan a few years ago conjures memories of silent markets and the inability to get any brokers on the phone in either Seoul or Osaka during game play….Hopefully this will not be the case this time around, but it is something to be cognizant of over the next week or so. Have a great weekend.