ForexLive European morning wrap: yen and pound the focus in scrappy markets

By: Mike Paterson

The forex trading headlines for the european morning session: BOJ dep gov says it's important that govt guarantees fiscal discipline Irish manufacturing PMI 48.6 vs 51.5 prev Cyprus stock exchange suspends share trading in Bank of Cyprus and Popular Bank until April 15 BOJ gov Kuroda says bold monetary easing needed Spanish manufacturing PMI march  44.2 vs 46 exp 46.8 prev Swiss PMI 48.3 vs 50.2 exp 50.8 prev Italian manufacturing PMI march 44.5 vs 45.5 exp  45.8 prev French manufacturing PMI march  44 vs 43.9 exp  43.9 prev German manufacturing PMI march 49 vs 48.9 exp  50.3 prev Eurozone manufacturing PMI march  46.8 vs 46.6 exp 46.6 prev UK manufacturing PMI march  48.3 vs 48.5  47.9 prev UK mortgage lending +0.9bln vs +0.4bln exp  +0.1bln prev. approval 51.6k vs 54.7 exp. M4 -0.5% vs +0.9% prev Eurozone unemployment rate march 12% vs 12% exp 12% prev ( revised up from 11.9%) EU Commission says it is not in talks to extend deadline on Spain's budget deficit reduction It took a while to get going in europe after the easter break but once again it was the yen pairs that provided the spark. Walking in with USDJPY at 92.85 there was some follow-through selling of EURJPY as EURUSD failed to maintain momentum above 1.2855. Cue EURJPY down to 119.14 just above reported strong buying interest at 119.00 and USDJPY to test strong support at 92.50 posting lows of 92.56. When they both held and then BOJ gov Kuroda re-affirmed his commitment to "bold" monetary easing it was a green light for the rally and so far we've been back to 119.96 and 93.35 running into sell orders at 120.00 and 93.40 respectively. The eagerly awaited european manufacturing PMI did little to rattle any cages nor did the eurozone unemployment figures and EURUSD has been largely contained in a 1.2825-55 range driven mainly by EURJPY and EURGBP. The UK manufacturing PMI however did have impact coming in under expectations  and we saw traders scramble out of GBP positions bought prior on rumours of better data. GBPUSD fell from 1.5230 to 1.5181 support lines after wiping its feet at 1.5200 and has since struggled to get back over 1.5200. EURGBP needed no excuse to bounce back from lows of 0.8425 and and since posted 0.8459 before running into sell orders. Weaker mortgage approval and money supply data also added to the pound's woes. AUD has looked underpinned but still faces strong sell interest all the way up while the Kiwi has also looked well supported with NZDUSD rising to 0.8435 from 0.8390 in this session. All in all a scrappy morning in thin liquidity still with many traders that I know still away enjoying the easter hols.