Dollar opened at Y81 71 in Wellington and promptly crashed

GBP/USD

Range: 1.6307 – 1.6328

Support: 1.6250

Resistance: 1.6450

Dollar opened at Y81.71 in Wellington and promptly crashed lower on concerns that the costs of the recent earthquakes and tsunamis would be much large than expectations triggering large scale speculative sales in an illiquid market with some unsubstantiated reports of margin liquidation. Talk on the TV channels of the cost rising to as much as $180 billion spooked traders. Dollar-yen plummeted through stops at Y81.50/40 and Y81.00 to a low of Y80.60 before some demand into the Tokyo fix and talk that the BOJ would provide massive liquidity led an equally sharp rally up to Y82.47 on aggressive fund manager and short covering demand. Dollar has since settled to trade into a Y82.05/25 range ahead of the European open. BOJ injected an initial Y7.0 trillion of funds into the markets with warnings of possible FX intervention now deterring dollar bears.

EUR/USD

Range: 1.3847 – 1.3878

Support: 1.3770

Resistance: 1.3900

Asian trade as risk aversion, based on risks of nuclear meltdown at Japanese nuclear plants. Rate dropped back to $1.3917, filling most of the early gap, before settling around $1.3935 into early Europe. Eurozone peripheral spreads will be watched, following Friday’s agreements, with EMU IP at 1000GMT the only data of note. Weber and Bini Smaghi due to speak at 1200GMT and 1830GMT respectively. Eurogroup meeting today, ahead of Ecofin tomorrow. Resistance from $1.3986, extending to $1.4000. Above the figure and rate can edge on toward $1.4036 (2011 high, Mar7), offers extending toward $1.4050. Support $1.3900, a break to open a deeper pullback toward $1.3870 ahead of $1.3850/40. Larger demand said to remain in place between $1.3760/40, surrounding Friday’s lows at $1.3752.
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Gold

Gold prices rose on Friday in a mixed day, opening around $1412 and slipping from early highs around $1419.25 following the breaking news of a massive earthquake in Japan, but subsequently fell to a low of $1405 before beginning a strong climb back up to $1424.35. The metal closed the week at $1417.80 but opened last night with a strong rally to a high of $1433.10 as weekend news of possible radiation leaks at some Japanese nuclear power plants and the general escalation of damage to Japan rekindled safe-haven attraction. This has since waned with the metal slipping back sharply to $1418.40 before moving higher again to $1426 as Europe opened. Resistance is now seen at $1433.10 and $1436.50 with support at $1418.40 and $1404.90.

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