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By XE Market Analysis August 15, 2013 2:43 pm
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    XE Market Analysis: Asia - Aug 15, 2013

    The dollar firmed up in morning N.Y. trade on Thursday, with the large slate of data mostly positive. A multi-year low initial jobless claims print helped sentiment, which brought Fed taper prospects back into focus. At the same time, Treasury yields ramped up to trend highs, as Wall Street fell sharply, as stimulus addicted equity traders caught the cold sweats. EUR-USD gave the 1.3200 level a quick test, while USD-JPY rallied to 98.65. Gains were fleeting however, as the greenback took a dive in afternoon trade, reportedly led by EUR-USD buy stops at 1.3280 and again at 1.3300. That pairing peaked over 1.3345 before pulling back to 1.3315. USD-JPY touched 97.35, with stops at 97.55 apparently a factor as well. Yields did fade a bit, perhaps weighing slightly on the USD, though with the Fed's policy path still in question, nerves may have gotten the better of today's post-data long dollar positions.

    [EUR, USD]
    The dollar came off its best levels into the London close as position squaring set in, taking EUR-USD back to 1.3270, after running into solid bidding interest ahead of 1.3200 in morning trade. After the lower jobless claims outcome, the pairing slipped from 1.3300 to 1.3206 lows. The euro idled near 1.3270 in early afternoon, though stops at 1.3280 and again at 1.3300 took it to a 1.3345 peak, more than filling the post-data "gap" lower.

    [USD, JPY]
    USD-JPY met option supply on upticks amid very large maturities that are rolling off on Friday. There are $10 bln worth of strikes that are coming out of the market between 97.00 and 99.00. The largest exposure is at 98.10 in $3.75 bln. USD-JPY rallied early on with the better U.S. data and higher yields, though pulled back sharply with the dollar in general in afternoon trade. The pairing peaked at 98.65 early, before sliding to 97.35.

    [GBP, USD]
    Cable traded higher amid macro fund demand. There was a brief period of sideways to lower action as profit taking went through midway in the European morning. The initial move over 1.5500 in the wake of the BoE minutes and U.K. employment data met option names and interbank types selling in front of yesterday's highs. However, from a fundamental perspective real money see good long-term value for sterling. Economic data continues to beat expectations and activity should continue to pick up while the BoE maintains the current policy stance. Cable managed 1.5650 highs in N.Y. with follow through buying coming from the dollar's late day sell-off.

    [USD, CHF]
    EUR-CHF longs threw in the towel as USD-CHF failed to clear 0.9400 offers. The cross gave back all of the gains made since the European open trading from 1.2435 and is just breaking down through 1.2360. This is an ominous warning for the cross, which is gaining added traction from unwinding of leverage positions that were built up earlier in the week. Candlestick traders will note that on the daily chart this is the second consecutive session that a "gravestone doji" was recorded and signals a potential turning point.

    [USD, CAD]
    USD-CAD touched 1.0365 highs after the better U.S. jobs data, though quickly pulled back to 1.0325 opening levels. The pairing meandered in a tight range through the morning, and eventually headed to 1.0305 lows as the USD turned broadly lower. Standing bids at 1.0300 remained in place though, and downside may be the more difficult direction in the near term.

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