European Session: Orders and Options Watch

EUR: The single currency plunged yesterday on renewed concerns over eurozone debt crisis and rising bond yields (Italian, French and Belgium), despite recovering in New York morning, the pair fell again overnight to as low as 1.3515 this morning, however, bids are still noted ahead of 1.3500 barrier with more stops placed below there, followed by another barrier at 1.3450. On the upside, offers from various parties are reported at 1.3580 and also 1.3600-10 with some stops placed above latter level but more selling interest should emerge around 1.3650-60 and 1.3680 with sizeable stops only emerging above 1.3690-00.

GBP: The British pound also tumbled yesterday on release of record worst trade deficit and risk aversion, however, cross-buying against the euro somehow limited cable’s downside, the pair slipped to as low as 1.5901 this morning and stops below 1.5900 are in focus, more stops are reported below 1.5870 and 1.5850 (Eastern European names placed bids at 1.5860-65) with some bids tipped further out at 1.5825/30. On the upside, offers from UK clearer are reported at 1.5930-40 and 1.5980 with light stops seen at 1.6000. Traders are awaiting BOE rate decision at 12:00GMT, although the central bank is expected to keep rate unchanged at 0.50%, after ECB surprise cut last week, it becomes interesting to see BOE’s reaction and whether there will be any hint of expansion of QEP.

CHF: The greenback rallied against the Swiss franc on active buying by big corps and U.S. prime names (mainly in EUR/CHF), stops at 0.9085 and 0.9100 were triggered and the pair surged to as high as 0.9153 this morning. Fresh comments from SNB officials once again put pressure on the Swiss franc as they said the central bank is fully aware of its responsibility to restrain on an overvalued currency. At the moment, bids are still noted from 0.9080-85 and also 0.9050 (from French names) with some stops seen below 0.9020 and 0.9000. On the upside, mixture of offers and stops is located at 0.9155/65 (from European names) with more selling interest likely to emerge around 0.9200-10.

JPY: The greenback found decent demand yesterday twice at 77.54 and rebounded, although offers at 77.80 were filled, persistent selling interest from exporters capped dollar’s upside at 77.89 and price retreated again this morning. Once again the Japanese margin accounts are building up long positions on dips with good bids remain at 77.50 and stops are still parked below but more buying interest should emerge around 77.20-25 and 77.00. On the upside, offers are lined up from 77.90 up to 78.20 with some stops placed above 78.30 but bigger offers are expected at 78.40-50. Option expires today include 77.25 (300 mln), 77.50 (200 mln), 78.00 (200 mln) and 78.50 (500 mln).