While stocks generally remained weak in European markets on the 13th, the euro was bought back against the dollar and the yen remained firm against the dollar. The dollar-yen pair traded in the upper ¥158 range, while the euro-dollar pair was around $1.1194.
Stocks generally remained weak in European markets on the 13th, while in the foreign exchange market the euro was bought back against the dollar and the yen also traded firmly against the dollar. Falling US long-term yields capped the dollar's upside, prompting buying of the euro and yen. The dollar-yen pair ended at ¥158.35. It rose to around ¥158.37 during the day, but the advance was capped by the impact of reports published that day.
The area around the Ichimoku conversion line was watched as downside support, while there were also periods when falling US 10-year Treasury yields encouraged dollar buying. US existing-home sales exceeded market expectations, supporting the market. The euro-dollar pair edged up from the previous day to $1.1194, with short covering prevailing in the euro.
The euro-yen pair rose ¥0.36 to ¥177.26. It fell temporarily to ¥176.49 in the evening, but buying back prevailed and it rose to ¥177.38 shortly after 22:30. The British pound also rose against the dollar, trading at $1.3240-$1.3250 per pound. In equity markets, the London FTSE 100 edged lower, while Germany's DAX also posted its first small decline in 3 sessions.
UK gilt yields rose in the bond market, while German government bond yields fell. The revised September German CPI was at the same level as the preliminary reading. Market participants were closely watching the US CPI due on the 14th, and the dollar could strengthen again depending on the inflation data. There was a view that retail investors were increasing their short dollar-yen positions, while becoming more bullish on the euro-yen and Australian dollar-yen pairs.