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By XE Market Analysis December 11, 2014 4:36 pm
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    XE Market Analysis: Asia - Dec 11, 2014

    The dollar was mostly higher in N.Y. trade on Thursday, helped by better retail sales and initial jobless claims data, which propped up yields, and saw Wall Street rally nicely. EUR-USD moved from 1.2440 to lows into 1.2370, as USD-JPY climbed back over 119.00, to peak at 119.55. USD-CAD traded to trend highs near 1.1550, as WTI crude touched new trend lows just above the $60.00/bbl mark. Cable outperformed, though that was put down to reported EUR-GBP selling.

    [EUR, USD]
    EUR-USD trade into 1.2370 from near 1.2440 after better U.S. data. The pairing later managed to reclaim the 1.2400 handle into the London close, where intra day short covering was reportedly a factor. Since then, the euro slipped back under 1.2380, with the dollar continuing to find support on the back of firmer yields, and higher equity markets. Euro support remains into 1.2360 this afternoon.

    [USD, JPY]
    USD-JPY opened near 118.50, and rallied over 119.45 following stronger U.S. data, and a surging Wall Street. Fitch Ratings said overnight it will probably downgrade its Japan rating if the 2015 budget does not offset sales tax delay. Fitch cited high and rising government debt and increased uncertainty about authorities' commitment to fiscal consolidation. We see that the overall bias for USD-JPY will remain to the upside. Polls suggest that PM Abe will win this weekend's election, which would give yen-negative "Abenomics" policies a fresh mandate.

    [GBP, USD]
    Cable clocked a two-week high at 1.5757 in Asia before about-turning and dropping over 100 pips to a low at 1.5652, finding a toehold just above yesterday's 1.5647 low. The pairing recovered some in morning N.Y. dealings, touching 1.5724 highs before settling in just above the figure.

    [USD, CHF]
    EUR-CHF traded as low as 1.2011 after extending the losses seen in the wake of the SNB announcement, dropping 1.2015-17 from levels above 1.2030. This brings the rumoured SNB buffer zone between 1.2010 and the 1.2000 franc cap back into the frame. The SNB kept the Libor target range unchanged at 0.00-0.25%. SNB boss Jordan said that upward pressure on the franc has "intensified," and the central bank said it will enforce the cap with "utmost determination" and is prepared to take further steps if necessary. 'Further steps' may include negative interest rates.

    [USD, CAD]
    USD-CAD touched fresh trend highs over 1.1520 early in the session. The move higher came with a sharp early-session oil sell-off, which took WTI to new lows of $60.11, down nearly $1.50 over the first hour of N.Y. trade. USD-CAD rallied over 1.1550 from there, as crude slipped under $60, and is at its highest levels since July, 2009, with the clear break above 1.15 opening the door for a test of 1.1622, representing the July, 2009 peak.

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