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By XE Market Analysis April 27, 2015 2:54 pm
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    XE Market Analysis: Asia - Apr 27, 2015

    The dollar was broadly lower to start the N.Y. week, likely as the market prices in a pushed back FOMC rate lift-off. While few expect a rate hike at the next meeting in June, due to recently soft U.S. data, there has been growing expectations for a Autumn, or even a 2016 start to normalizing rates. As a result, dollar sellers stepped up today, looking for a more dovish Fed outlook. EUR-USD cleared 1.0900 to post three-week highs of 1.0926. as USD-JPY briefly at least, gave up the 119 handle. USD-CAD fell to three month lows under 1.2100, as cable claimed the 1.52 handle, posting a nearly two-month high. The economic calendar was light, though flash services PMI slipped, as the Dallas Fed index improved slightly.

    [EUR, USD]
    EUR-USD touched 1.0926, a three-week high. Good selling interest was noted over the figure however, with reserve managers reportedly active again. The pairing later slipped back to 1.0877 lows. The dollar overall was on the back foot today, perhaps as the proximity of the FOMC meeting reminds the market that U.S. rates are not going higher anytime soon. The April 7 high of 1.0954 is the next upside EUR-USD target.

    [USD, JPY]
    USD-JPY moved to N.Y. session lows of 118.86, as the dollar overall suffered from broad selling on Monday. The Fitch downgrade of Japan overnight had little impact, resulting in a brief USD-JPY pop to 119.42 from near 119.20. The pairing remained over 119.20 through mid-morning in N.Y, though later eased into the figure, as the greenback made session lows versus the other major currencies. We suspect the USD may be in for further selling into the FOMC announcement, where the market prices in more dovish undertones from the Fed.

    [GBP, USD]
    Sterling was in correction mode in London after Friday's strong rally against the dollar to an eight-week high at 1.5188. The pair drifted to a low of 1.5116 so far, which was driven by a broader rebound in the dollar overnight. Losses were brief however, as the greenback came under broad pressure, taking cable to nearly two-month highs over 1.5260.

    [USD, CHF]
    EUR-CHF gave back some of Wednesday's gains, falling to 1.0314 lows. The SNB said on Wednesday it would reduce the number of institutions exempt from negative interest rates on sight deposits, and could open the door for more negative rates in the near future, perhaps to offset a potential Greece EMU exit. The retracement came on profit taking, though with the threat of interest rate moves, shorts will be wary going forward.

    [USD, CAD]
    USD-CAD rallied over 1.2180, after finding good support into the 1.2100 level earlier in the session. Aside from USD-JPY, which continued on a softer footing, the greenback made up some ground through the morning session, including against the CAD. Oil prices provided a lift to USD-CAD, as WTI fell over $1/bbl to $56.50 lows. Traders now see scope for a move back to 1.2200, should oil prices remain on the defensive.

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