The dollar extends its decline against the yen and high yielders amidst a dearth of economic data yesterday. The continual rise in the high-yielders indicate that markets are still risk-taking. News that one of China’s state owned banks has bought a 3.1 percent stake in Barclays, one of the UK’s biggest banks send the pound soaring above 2.0600.
Overnight, NZD/USD traded to a high of 0.8072; AUD/USD to 0.8841 whilst GBP/USD to 2.0597. The AUD and NZD are likely to remain firm on the back of strong Australian producer prices and speculation that the Reserve Bank of New Zealand will be raising interest rates to 8.25 percent later this week.
Elsewhere in Asia, the yen struggles to keep its gains. If a break of 120.80 is sustained, we would see a test of 118.70.
With renewed concerns on U.S. subprime mortgage crisis, new and existing U.S. home sales tomorrow would be key data to look out for.
GBP/USD Buy at 2.0605 for 2.0750 target. Stops at 2.0540.
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