Yen Pushes Dollar Lower As Euro Fails To Maintain Gains

Theeuro was again under some pressure during today’s Asian session, despite receiving a boost the previous day from a stronger-than-expected German IFO business confidence survey and some hawkish words out of Bundesbank Chief Jens Weidmann. The euro held above the 1.24 line at 1.2426, having traded as low as 1.2358 the previous day. It was a little down compared to its New York close of 1.2441.

Specifically, Weidmann warned that the legal hurdles to be overcome for the purchase of sovereign bonds by the ECB could be substantial. This threw cold water on market expectations that sovereign QE out of the ECB was imminent, although it is difficult to assess whether Weidmann and his allies are in a position to stop the rest of the council if they are indeed determined to proceed with sovereign bond purchases.

The yen managed to push the dollar below the 118 mark to 117.80, although there was little in the way of news to persuade traders to close their yen shorts. A speech by Governor Kuroda more or less reiterated his recent stance that the BoJ would keep trying to raise inflation. The Bank of Japan minutes from the crucial 31st October meeting showed the dilemmas facing the committee and the dissent Kuroda faced in extending the stimulus. Subsequent data such as Japanese GDP numbers provided some justification in retrospect for the additional easing.

The aussie was under significant pressure and marked a session low of 0.8568 before it rebounded to near the 0.86 level (0.8591). Weak iron ore prices were to blame according to reports.

Looking forward to the remainder of the trading day, economic news will be relatively thin, with the possible exception of the preliminary US 3rd quarter GDP growth number. The advance estimate came in at strong 3.5% annualized pace, but economists expect it to be downgraded slightly to 3.3%. The sales measure of GDP growth (which excludes inventory buildups) is expected to come in at an even more subdued pace of 2.5% and analysts will be looking for the continuation of moderate if unspectacular US growth. The Conference Board’s consumer confidence indicator for November later will round up the economic news for today.