THE TIPSTER

 
Philip Salter
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THE Japanese yen remains under significant pressure, which is not being helped by news of supply chain disruption at Toyota’s US facilities. What should have been a valuable source of funds ready to be repatriated is being taken out of the equation. The concern now has to be that the situation is going to get worse before it improves. After the early resilience the currency saw in the aftermath of the earthquake, there's now been a wholesale reversion. IG Index offers sterling-yen at ¥136.91-¥136.94.

With the ECB widely expected to raise interest rates on Thursday, the euro has enjoyed something of a rally even against the Swiss franc. However, it appears to have run into some technical resistance around the 200 day moving average and could well slip back. CMC Markets offers euro-Swiss franc at SFr1.30810-SFr1.3084.

The fear is that the rate rise delivered by the ECB on Thursday may look too premature given the ongoing funding stress in the European periphery. Market participants are likely to be given a stark reminder that a “one-size-fits-all” monetary policy will hamper European recovery. Market participants have fully priced in a 25 basis point rate hike, so any disappointment or dovish talk will lead to euro declines across the board. On euro-dollar Alpari UK offers a spread of $1.4171-$1.4173.

Yesterday a surprise jump in PMI service data for the UK caused a jump in sterling, which has recently lost quite a bit of ground against the euro. The move higher by sterling-euro might be a reversal signal that the downward trend is over and we could test higher ground. Capital Spreads quotes €1.1460-€1.1463 for sterling-euro.