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By XE Market Analysis April 22, 2014 3:07 pm
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    XE Market Analysis: Asia - Apr 22, 2014

    In-line existing home sales, a better Richmond Fed index, and mostly better than expected corporate earnings re;eases helped the dollar modestly higher on Tuesday. Wall Street and Treasury yields were higher as well. Overall however, the FX market remained narrowly traded, with EUR-USD peaking at 1.324 early in the session, before basing at 1.3790. USD-JPY meanwhile, slipped briefly under 102.50, and from there, struggled over 102.65. USD-CAD held the 1010.00 level, though the subsequent rally from the lows sputtered out near 1.1040 resistance. Cable was steady over 1.6810.

    [EUR, USD]
    EUR-USD took out modest stops into the London close, taking the pairing to 1.3790 lows. N.Y. names were reportedly the sellers of note on the way down. The euro struggled over 1.3800 through the morning, perhaps as the ECB says it has room to cut rates further, according to council member Coere, who said overnight that the appreciation of the EUR has contributed to the low inflation rate. The market looks for continued talking down the euro from the ECB, though the currency has been resilient so far. A N.Y. close under 1.37900 may prompt some selling in Asia, but a move under 1.3770 will be needed to really shift sentiment.

    [USD, JPY]
    USD-JPY was pretty much dead in the water through the N.Y. session, touching lows of 102.46, and a peak of 102.66. The larger Japanese trade deficit reported overnight weighed some on the yen, as did the better equity market backdrop on Tuesday though we maintain until the BoJ's policy outlook becomes clearer, USD-JPY upside could be limited going forward, with 101.00 to 103.00 seen as a reasonable range for now.

    [GBP, USD]
    Cable has settled lower, around 1.6820, after stalling 3 pips of last Thursday's five-year high at 1.6842. EUR-GBP was lifted at the same time after the cross made a six-week low of 0.8201. Good corporate bidding interest was reportedly seen into 0.8200 in EUR-GBP. We expect sterling to remain broadly underpinned amid expectations for tomorrow's release of the BoE MPC minutes to the April policy meeting to take a relatively hawkish tone. We are targeting an eventual break above 1.7000. Support is now marked at 1.6800 and 1.6780.

    [USD, CHF]
    EUR-CHF has settled around 1.2200 again, having recovered from the one-month low of 1.2142 that was seen last on Monday. The cycle low of 1.2104 was left untested. While situation in the Ukraine remains a concern, and this is a potential supportive factor for the CHF, the threat of SNB intervention into its 1.2000 limit peg is helping to deter franc buying.

    [USD, CAD]
    USD-CAD dipped to 1.1005 from near 1.1020 after the strong Canadian wholesale data, bounced back to 1.1020, before posting intraday lows of 1.1004. It appeared solid bids were in place into the figure, and a break of 1.0980 will be needed to shift sentiment out of range trade mode. On the other side of the market, resistance was seen at 1.1040, and the pairing managed 1.1042 highs before easing back into 1.1010.

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