FXstreet.com (Barcelona) - The EUR/JPY has been the main market
mover over Japan's Finance Minister Aso comments regarding the
usage of foreign exchange reserves to buy ESM bonds in order to
help stabilize the Yen. As there will be a ESM bill auction later
today, it's quite possible the EUR/JPY reacts to the results.
Lutz Karpowitz, Commerzbank analysts, explains how the FX market
can be misled by this kind of remarks and measures: "Clearly the
markets were taken in by this announcement as there is no actual
reason for JPY weakness if Tokyo uses its FX reserves to purchase
ESM bonds. Obviously the FX reserves are being held in foreign
currency anyway. So no sale of JPY is involved". "We too assume
that the latest depreciation is not enough for Tokyo, while today's
announcement on the ESM bond purchases is unlikely to have a
sustainable effect", Karpowitz added.
Throughout the European morning, Germany revealed very soft exports
(-3.4%) and imports (-3.3%) and a narrowed trade surplus from
€15.1B to €14.5 in November. Factory Orders also fell, -1.8% (MoM).
The Eurozone has found improving leading indicators in December, an
upwards revision in the annualized retail sales figure of October
(from -3.6% to -3.2%) and a rising unemployment rate to 11.8% in
November, as expected.
"EUR/JPY's overextended rise has broken its steep rising trendline
but the low of its rising channel has thus far held", wrote MIG
Bank analyst Bijoy Kar, pointing to a short-term key support at
113.20 (31/12/2012 low) and the need of a break above the
resistance at 115.99 to resume the short-term bullish momentum.