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By XE Market Analysis August 22, 2013 1:38 pm
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    XE Market Analysis: Asia - Aug 22, 2013

    After trading higher overnight, the dollar was mixed in N.Y. dealings on Thursday, losing ground to the euro and CHF, while steadying versus the yen and sterling, and rallying against the CAD. EUR-USD found support at 1.3300 and eventually bounced over 1.3370, as USD-JPY idled mostly over 98.50. USD-CAD took out 1.0500 barriers, while cable consolidated under 1.5600. On the economic front, jobless claims were a bit firmer than forecast, while the flash PMI was slightly higher, and leading indicators better than expected. Stocks posted gains, as Treasury yields continued to firm.

    [EUR, USD]
    EUR-USD found good support at 1.3300 and backed up as light dollar profit taking went through. There are close-to-market stops through 1.3290 and 1.3270, though these never came into play. Buyers of the EUR included corporate names and European interbank that booked profit towards 1.3300. Any upticks in the EUR should be sold into in near term. EUR-USD moved to intra day highs of 1.3372, as London names reportedly bought on the move over 1.3350. End of day position squaring was likely the motive, and from there, better risk taking levels limited the dollar's downside.

    [USD, JPY]
    The JPY headed lower as PMI data from China and Germany boosted risk appetite. USD-JPY rallied from 97.70 to 98.80 on an intra-day basis as a series of stops were cleared away. Fund names positioned for further upside based on the premise that USD-JPY will sustain higher levels amid rising U.S. yields, while BoJ Kuroda sounded willing to ease policy again next year if the sales tax hike hampered the recovery. USD-JPY was supported at 98.40 through the N.Y. session.

    [GBP, USD]
    Cable traded close to 1.5600 into the N.Y. options cut. It made a few attempts to clear away support at 1.5550 ahead of the N.Y. open. Good bids put a floor in place and there was tentative demand from specs, no doubt front running ahead of tomorrow's second reading of U.K. Q2 GDP, which should be confirmed at 0.6% q/q. There are some accounts positioning for a upward revision after the run of better U.K. data in June. Cable is still looking fairly stable overall, but dovish comments from BoE hawk Weale overnight did some damage to market psyche -- previously trading GBP like it was a one-way bet.

    [USD, CHF]
    CHF fell as European stocks rallied on PMI data. Early action was dominated by USD-CHF gains following the FOMC minutes, which elevated the pair from under 0.9200 back over 0.9250. However, European action was influenced by an early EUR demand as German PMI data boosted the composite reading and helped EUR-CHF to move out of 1.2320 up to the 1.2345 area. USD-CHF eased back in N.Y. trade, finding support into 0.9220. The cross meanwhile, eased to 1.2330 from highs near 1.2360.

    [USD, CAD]
    USD-CAD flirted with the 1.0500 level in early trade, and ground its way over a little later. Barrier options were extinguished on the way through. Stops were above 1.0500, though some resistance was noted into 1.0520. The pairing stayed over the figure through the session, as weaker Canadian retail sales data supported, and it managed a high of 1.0526 in afternoon trade. Bids are now in place around 1.0480, while stops are seen over 1.0540 (July 10 high).

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