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By XE Market Analysis April 29, 2014 2:16 pm
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    XE Market Analysis: Asia - Apr 29, 2014

    Yet another relatively quiet day in N.Y. FX trade on Tuesday, with the dollar mostly lower. The greenback rose modestly versus the euro and CHF, though lost ground to the yen, sterling and CAD. EUR-USD made an early move from 1.3860 to session lows near 1.3810 on stop loss selling, before turning sideways from 1.3810-20. USD-JPY got a bit ahead of itself, peaking near 102.80, then slipping back toward 102.50 ahead of the overnight BoJ announcement. USD-CAD finally broke out of its recent range, taking out 1.10 on its way to 1.0956 lows. U.S. data was a bit softer, with house prices flat, and consumer confidence under expectations. As usual however, there was little market reaction. Equities rallied, as yields came off their best levels.

    [EUR, USD]
    EUR-USD's slide from around 1.3860 to 1.3812 session low was apparently the result of London sell stops hitting the market on the move under 1.3850, just under the prior London low of 1.3855. Dealers said a lack of liquidity was an issue, likely exaggerating the move. Good bidding interest is seen into 1.3800 now, where Asian reserve managers are said to be parked.

    [USD, JPY]
    USD-JPY was taken to 102.78 highs, where the atmosphere got a bit thin for the market's liking. Pre-BoJ profit taking has subsequently hit the pairing back down to near 102.50, before stabilizing. Policy hints in favor of further BoJ stimulus will likely see the 103 level taken out, though we still see significant downside risk should Kuroda remain mum on the topic. A boilerplate "wait and see, but ready to act" might be enough to see the market test USD-JPY's two-month base near 101.20.

    [GBP, USD]
    Sterling took a dive on the prelim GDP data out of the U.K., which came in one tenth of a percentage point below the median expectation in both q/q and y/y measures. Cable saw buyers return under 1.6800 however, and the pairing rallied back up to 1.6845 in N.Y., matching London highs before settling marginally lower.

    [USD, CHF]
    EUR-CHF climbed back over 1.2200, as risk levels improved, despite the uncertainty in Russia/Ukraine. USD-CHF moved higher as well, outperforming EUR-USD and touching a high over 0.9945. The CHF will remain tied to general risk levels, though with the SNB on guard for EUR-CHF, downside will be limited.

    [USD, CAD]
    USD-CAD continued to be mired in a 1.1000-60 range, today marking the sixth consecutive session inside the band. Events later in the week may push the pairing out of its quiet zone however, with the FOMC and perhaps more importantly, the BoJ meeting on tap, along with EU inflation, and U.S. employment data. In the meantime, bids remain at 1.1000-10, with offers parked at 1.1050-60. The pairing ultimately managed a 1.1018 to 1.1039 range.

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