THE TIPSTER

 
Philip Salter
Follow Philip
THE dollar is continuing to regain lost ground against the yen, eyeing a move back above ¥82.00, which hasn't been sustained since the wider implications of the earthquake and tsunami were priced into the market around two weeks ago. The repatriation risk for the yen still needs to be taken into account, but coordinated central bank intervention has been effective so far. Dollar bulls will now be eyeing a sustained move higher. IG Index offers ¥81.91-¥81.94.

Stress tests on Irish banks, a political wobble in Portugal, and the possibility of an official announcement on bond restructuring have all added severe volatility to euro pairs. This will continue as traders wait for a concrete resolution. Speculation of a Portuguese rescue is already taking euro pairs higher. Portugal accessing the EFSF is unlikely to be euro negative, although political complications and mandatory discounts on existing debt would be. Alpari (UK) offers a spread for euro-Swiss franc of SFr1.2964-SFr1.2966.

At $1.4150, euro-dollar looks a little near the top. However, we could still see the euro gain further against the dollar. Middle Eastern sovereign names diversifying petrodollars continue to buy dips in reasonably big size and M&A flows like the AT&T/Deutsche Telekom deal will be euro positive in the short-run. So with a strong uptrend in place and moving average support, any dips towards $1.400 should be used as a buying opportunity. Spread Co offer a spread of $1.40883-$1.40891.

Last week sterling reached $1.64 against the dollar. However, cable has now fallen every day for a week, with the immediate outlook potentially bearish. Weak UK retail sales for February and protests against cuts have put the pressure on. The dollar has been gaining in strength on the back of interest rate rise expectations and fourth quarter GDP being revised upwards. Capital Spreads quotes $1.5994-$1.5996.