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By XE Market Analysis August 20, 2014 3:04 pm
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    XE Market Analysis: Asia - Aug 20, 2014

    The dollar softened marginally through the morning session, before turning sideways ahead of the release of the FOMC minutes. The dollar rallied broadly after the minutes, taking EUR-USD to trend lows of 1.3260 from around 1.3290, and USD-JPY up to 103.74 from 103.35. The Fed noted a better than expected trajectory in the labor market, which could move up rate hikes, and which appeared to have been the main driver. Yields ticked up, as stocks stumbled initially, though indices later recovered marginally into the green.

    [EUR, USD]
    Short covering took EUR-USD to 1.3297 highs into the London close, with traders reporting some position paring ahead of the FOMC minutes. This said, fresh offers were seen entering the fray from 1.3300 to 1.3320, with the previous support level becoming resistance. After settling in on either side of 1.3285, the euro dropped to new trend lows of 1.3256 into the close.

    [USD, JPY]
    USD-JPY rallied to a four-month highs above 103.40 in morning trade, reflecting a broad gain in the dollar following net positive U.S. data on Tuesday, and coming ahead of the FOMC minutes. The pairing eased back into 103.20 ahead of the minutes, likely on profit taking, though spiked up to 103.74 highs after the release, as the prospects for U.S. rate hikes sooner increased.

    [GBP, USD]
    Sterling is settled after rallying during the London AM on the release of the August BoE MPC minutes, which showed two members dissenting in favour of hiking the repo rate. Cable later fell to trend lows of 1.6590 after the FOMC minutes, which perhaps moved up a Fed rate hike, and helped the dollar broadly.

    [USD, CHF]
    EUR-CHF held 1.2100 in N.Y. on Wednesday, as geopolitical fears abated to a degree, though traded an even narrower 1.2104-14 range through the session. It will not take much in the way of new threats to bolster the CHF again, though in the meantime, traders be reluctant to push the cross much further, with SNB warning shots expected on a move under the figure. The Bank has assured markets it will defend its 1.2000 line in the sand.

    [USD, CAD]
    USD-CAD peaked at 1.0962 in London, ahead of noted 1.0970-80 offers, before slipping back under 1.0940 in North American dealings. As was the case with other major dollar pairings, some profit taking was seen in USD-CAD, perhaps as the market took a step back into the FOMC minutes. Following the minutes, the pairing rallied from near 1.0950 to session highs of 1.0972, with gains halted by above mentioned offers.

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