THE TIPSTER

 
Philip Salter
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WITH market attention fixed on the 24/25 March EU summit and an easing of market conditions in Japan, there is a strong chance of volatile price action on euro-yen. Finland’s unwillingness to double its loan guarantees was a mild surprise and could derail the ongoing up-trends in several euro pairs. The yen’s strength has been tamed by a multilateral intervention effort by the G7. Whether this will succeed remains debatable. Alpari offers a spread of ¥114.41-¥114.44.

Safer havens seem out of favour, as the euro rose to a five month high against the dollar, on expectations of an interest rate hike. Although the euro has slipped back slightly with the resurfacing of sovereign debt concerns, the stronger focus seems to be on the interest rate situation. For this reason, there is potential upside for euro-dollar. Capital Spreads quotes $1.4200-$1.4201.

With yesterday's inflation figure reinforcing the need for the Bank of England to act, markets are increasingly confident that we’ll see a hike in the not too distant future. As a result, sterling has seen support across the board, although any wobbles in the growth forecasts released in today’s budget could cloud the situation. The current IG Index price on euro-sterling is £0.8696-£0.8698.

Yesterday, the dollar opened up under pressure across the board. Allied to the release of the UK’s CPI data, this gave sterling a bid tone. It promptly took out the key resistance at $1.6360/80. However, as risk appetite ebbs and flows, sterling’s course will not be a one-way ticket. Expect it to meet trouble at $1.6400, a psychological level, and $1.6455, the 2010 high. ETX Capital offers $1.6369-$1.6372 on sterling-dollar.