Home News FOREX-Euro surges in surprise move driven by flows linked to Japan – Kitco News

FOREX-Euro surges in surprise move driven by flows linked to Japan – Kitco News

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* Euro jumps in surprise late Asian move

* Dollar index sags, weighed down by euro’s strength

* Sterling up but lacking direction after Brexit delay

* Graphic: World FX rates in 2019 (Adds context, updates prices)

By Tom Finn

LONDON, April 12 (Reuters) – The euro rose sharply on Friday
in a move dealers said may have been driven by anticipated
currency demand arising from a Japanese bank’s plans to purchase
a German multi-billion dollar aviation finance business.

The common currency jumped late in Friday’s Asia session and
then extended gains in the European session to a 2-1/2-week
high.

Markets are often quiet in the hours before European trade
opens and thin liquidity has in recent months caused sudden
jolts or “flash crashes” in major currencies including the Swiss
franc. Those types of moves are less common in the heavily-traded
euro-dollar currency pair which has a daily turnover of over $1
trillion.

The pair has traded in a narrow range at a time when
volatility in foreign exchange markets is at a multi-year low,
said Elisabeth Andreae, an FX strategist at Commerzbank.

“It is remarkable that particularly in this market
environment we see jumps even in EUR-USD typically during Asian
trading times. This morning we saw a move from $1.1260 to
$1.1290 in one fell swoop,” she said.

Dealers said speculators were buying the euro in response to
reports on Mitsubishi UFJ Financial Group’s planned
purchase of the aviation financing business of Germany’s DZ
Bank. As of June last year, the portfolio of that business stood
at 5.6 billion euros.

The transaction was announced on March 1 and MUFG said the
it was expected to close after June. The euro rose 0.6 percent to $1.1318 , its highest
since March 26. The common currency also advanced about 0.8
percent to 126.69 yen , its strongest since March 20.

The single currency has remained in a range of $1.12-$1.16
in 2019 despite a slowdown in the euro zone economy prompting
new stimulus from the European Central Bank.

“We think the euro is about to become ‘interesting’ again.
As is often the case, range-trading can mask an underlying
build-up of pressures that get released eventually,” said
Vassili Serebriakov, a currency strategist at Credit Agricole in
New York.

“We acknowledge the ECB’s dovishness but are inclined to see
growth (in Europe and globally) as the more forward-looking, and
bullish, driver of the euro,” he said.

This week both France and Italy reported higher than
expected industrial output in February, offering positive signs
for the bloc after some downbeat data.

Pressured by the stronger euro, the dollar index against a
basket of six major currencies was down 0.4 percent at
96.828, giving up most of the previous day’s gains.

With the dollar broadly lower, the pound rose 0.2 percent to
$1.3078 to cancel out most of the previous day’s
losses.

Volatility for sterling plunged after a midweek deal at an
emergency European Union summit to postpone Britain’s exit from
the bloc to Oct. 31. The deal meant Britain would not crash out
this week without an agreement.

(Editing by Keith Weir and Andrew Cawthorne)

tom.finn.reuters.com@reuters.net))

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