Yen Pared Gains as Stocks Rebounded
The yen pared its gains as Asia stocks rebounded on Friday, putting an end to yesterday??™s carry trades unwind story triggered by speculations on China rate increase. The dollar climbed to 118.94 against the yen. Other higher-yielding currencies, such as the Australian dollar and kiwi also gained versus the yen after Thursday??™s decline.
The Bank of Japan is widely expected to maintain its interest rates as low as 0.5%, the lowest among all industrial nations, in the near term. The yen will continue to be favored by carry trades investors as a funding currency.
USDJPY encounters interim resistance at 119, backed by 119.30 and 119.50. Subsequent ceilings will emerge at 119.80, followed by 120 and 120.30. On the downside, support begins at 118.50 and 118.20, followed by 118. Additional floors are eyed at 117.70, backed by 117.50 and 117.30.
Sterling Fell on Retail Sales
The sterling fell in a knee-jerk reaction to a weaker-than-expected retail sales report due on Friday. UK retail sales rose 0.3% in March, slower than the forecast of a 0.5% rise and previous reading of 1.4%. The sterling dipped almost 50 pips to 1.9991 versus the dollar, but regained its strength quickly after the number was digested and seen not to alter the big picture of the economy and central bank rate hike outlook. The currency stands firmly above 2 in the rest of the trading hours today.EURUSD will face interim resistance at 1.3620, followed by 1.3650 and 1.3680. Additional ceilings will emerge at 1.37, backed by 1.3730. Support starts at 1.36, backed by 1.3580, 1.3550 and 1.3530. Subsequent floors are eyed at 1.35.
GBPUSD encounters interim resistance at 2.0030, backed by 2.0050, and 2.0070. Subsequent ceilings will emerge at 2.0100, followed by 2.0130 and 2.0150. On the downside, support begins at 2.0000, followed by 1.9970 and 1.9950. Additional floors are eyed at 1.9930, backed by 1.9900 and 1.9850.