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By XE Market Analysis December 12, 2013 2:36 pm
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    XE Market Analysis: Asia - Dec 12, 2013

    The dollar settled in at or very near session highs versus all major currencies in N.Y. trade on Thursday. This saw the USD index rally back over 80.20 from session lows of 79.85. EUR-USD found support around 1.3750, after failing over 1.3800 in London. USD-JPY meanwhile, seemed to have turned the corner, able to hold the 103 handle into the close. The commodity bloc was soft, as USD-CAD moved over 1.0650, and AUD-USD dropped to three-plus month lows under 0.8920, within striking distance of August lows of 0.8849. It remains to be seen, though with recent U.S. data improving, U.S. yields edging higher, and Dectaper still on the table for some, further USD short covering may be in the cards into next week's FOMC announcement.

    [EUR, USD]
    EUR-USD popped higher on ECB-speak into the N.Y. open, which saw a peak of 1.3790, shy of the earlier 1.3803 peak and yesterday's trend peak of 1.3810. Board member Praet said that banks may reduce purchases of sovereign debt to lower their risk profile. EUR-USD dipped to 1.3760 from 1.3780 following the better U.S. retail sales outcome, eventually finding support on either side of 1.3750. The lack of bounce seen in afternoon trade may point to further losses overnight into the weekend, as long euro positions are pared down into next week's FOMC meeting. Tuesday's low of 1.3735 will provide initial support, though under there, 1.3690 and 1.3615 will be key.

    [USD, JPY]
    USD-JPY looked a little shaky into the N.Y. open, touching 102.67 lows at the open. The better U.S. retail sales however, helped yields higher, and gave the dollar a broad based boost. Dollar-yen found resistance initially at 103.00, where Japanese exporters were reportedly on the offer, though later managed highs of 103.20, and held the 103 handle through the close. The Fed's course to tapering and the ECB's refrain from announcing further non-conventional stimulus last week is a contrast to the BoJ's committed anti-deflation fighting stance, though stock markets and associated risk appetite will need to remain reasonably buoyant, or at least nothing much worse than neutral, if fresh yen weakness is to be seen.

    [GBP, USD]
    Cable gave back the 1.64 handle in early N.Y. trade, reacting to the U.S. retail sales data. The pairing steadied into 1.6350, though a break under the London low of 1.6353 brought on a fresh wave of stop-loss selling. The pound hit lows of 1.6321 before stabilizing. Cable has continued to struggle over 1.6400, and a break of Friday's 1.6295 lows could open the floodgates to more stop loss selling.

    [USD, CHF]
    The SNB left monetary policy unchanged and reaffirmed the CHF ceiling of 1.20 to the EUR. The central bank said the franc is still strong and there are downside risks to Swiss growth as global uncertainty remains high. The CHF moved lower versus both the dollar and euro after the announcement, though retraced higher into the N.Y. open. After the dollar's stronger performance post-retail sales, the CHF came under further pressure, resulting in USD-CHF moving over 0.8910 from lows under 0.8850, and EUR-CHF vaulting over 1.2245, from lows near 1.2200.

    [USD, CAD]
    USD-CAD eased lower overnight, trading toward 1.0560 before recovering to 1.0615 after the mix of U.S. and Canadian data. Corporate bids were noted at 1.0560-50, with stops underneath. USD-CAD later peaked at 1.0654, after running through offers at 1.0620. Higher U.S. yields, tempering oil and gold prices, along with prospects for Fed tapering lifted the greenback through the session, and for USD-CAD, sources see little in the way of resistance now back up to the 1.0700 level.

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