The euro opend in New York (8:30 am) at 1.1416 and immediately shot up to the local high of 1.1436 just shy of the European top of 1.1445. Higher Bund yields and a European holiday (Ascension Day) with reduced liquidity put a squeeze on short positions which traders think may continue into Friday on the continent.
The euro was bid against the yen, sterling and aussie and also strong in many of the crosses but the extended play higher and lower Bund yields in the European afternoon brought out profit sellers. The reversal found support at 1.1405 and 1.1395 but the break of 1.1390 in late morning in New York, brought about liquidation of the day's long positions. In the last hour before the London close the euro traded to 1.1344, the market low.
U.S. PPI for April was much weaker than expected at 0.4 percent on a 0.1 percent forecast as were the various components, core, final demand, monthly and annually. Initial jobless claims were better than predicted at 264,000, holding near 30 year lows, but had little impact on trading.
Mario Draghi ECB President noted in a speech to the IMF that strong headwinds against inflation remain, an observation underscored by weakness in the American producer price index. This helped push the euro to its above mentioned low at 1.1344. Demand gradually lifted the rate back to 1.1407, the entire New York afternoon being a slow trade up closing at 1.1410.
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