THE TIPSTER
STERLING-yen continues to come under pressure as it hit a low yesterday not seen since the earthquake related slide in mid-March of ¥129.73. Heavy pressure on dollar-yen and a similarly weak cable helped to push it lower. It looks intent on testing the support areas around ¥129.15-¥128.70, so anyone tempted to buy this pair should approach with extreme caution. It might be best to wait to see if it reaches ¥128.0 before buying. Spread Co offers sterling-yen at ¥129.69-¥129.77.
So long as there’s call for a safe haven in financial markets, the Swiss franc is unlikely to be short of supporters. The greenback has lost around 30 per cent of its value against the Swissie over the last 12 months. With ongoing uncertainty over economies on both sides of the Atlantic, there’s little reason to believe this trend will come to an end any time soon. Current IG Index price on dollar-Swiss franc is SFr0.8433-SFr0.8435.
With the FOMC meeting today, and a Bernanke press conference later, the US dollar could be set for a bounce, especially if the chairman signals that no further QE is forthcoming. This could well provoke a bounce in dollar-yen, which is trading just off one month lows. CMC Markets spread on dollar-yen is ¥80.165-¥80.174.
Mixed Chinese macro data has been hitting the wires – weaker credit growth but stronger industrial production is being offset by a positive Japanese recovery since the tsunami. Japan’s industrial production report released last week revealed that manufacturers are forecasting a huge 8 per cent increase in production during both May and June. If the actual economy follows these forecasts, the level of industrial production would exceed the average of Jan and Feb 2011 (pre-tsunami) by June. On euro-yen, Alpari offers a spread of ¥114.90-¥114.92.