Home > XE Currency Blog > XE Market Analysis: Asia - Dec 16, 2013

AD

XE Currency Blog

Topics6593 Posts6638
By XE Market Analysis December 16, 2013 2:10 pm
    XE Market Analysis's picture
    XE Market Analysis Posts: 4539
    XE Market Analysis: Asia - Dec 16, 2013

    FX trade was very slow in N.Y. on Monday, as holiday conditions set in in earnest, and traders remained cautious ahead of Wednesday's FOMC announcement. The jury remains split on tapering for this meeting, so either decision could have some significant impact on the greenback. EUR-USD failed to take out the 1.3800 level into the open, and spent much of the session slowly drifting lower. The pairing touched 1.3743 lows, above the lowest level seen in London. USD-JPY was dead calm on either side of 103.00, while cable found support under 1.6300. On the economic front, the Empire State index returned to positive territory, though missed expectations, while Q3 productivity was revised higher, and November industrial production handily beat forecasts.

    [EUR, USD]
    EUR-USD moved steadily lower since mid-morning, touching 1.3743 lows, after peaking at 1.3798 into the open. The London low of 1.3737 may provide initial support, though stops are seen building from 1.3730. There wasn't enough ammunition in the market to head much lower this afternoon, though the failure to trade the 1.38 handle again may push some weaker longs out during the Asian session.

    [USD, JPY]
    After getting thumped in Asia, USD-JPY recovered from 102.65 lows, back to 103.15 highs in London. N.Y. dealings saw the pairing come offits best levels, though it found support under 102.90 through the session, ending up closing near 103.00. Trade was very light, with dealers reporting modest flows at best. A breach below 102.60-64 would present the Dec-11 base of 102.15 as the next correction target. Lower stock markets today in Asia were a supportive influence for the yen, and funding currencies like the yen typically rebound then there is a whiff of risk aversion in the air.

    [GBP, USD]
    The pound corrected quite sharply last week after trading at two-year peak against the dollar and five-year highs against the yen. GBP-USD managed to stabilize back above 1.6300 after leaving a 16-day low of 1.6262 on Friday. Cable found support under 1.6300 through the N.Y. session, though many appear to be waiting for one more push downward, before building long positions again.

    [USD, CHF]
    We expect the safe haven Swiss currency to remain broadly underpinned into next week's FOMC meeting in the U.S. as a significant portion of market participants are anticipating the Fed to commence QE tapering, which in the event has the potential to trigger a more sustained period of risk aversion in global financial markets. USD-CHF resistance is marked at 0.8835 and 0.8900. EUR-CHF support is at 1.2200-1.2205. The breach of the Jun-24 low of 1.2218 on Wednesday was a bearish development. Initial target is the Apr-21 low of 1.2179. Resistance shows up at 1.2250 ahead of the 20-day moving average at 1.2274.

    [USD, CAD]
    USD-CAD was in a very narrow trading band through the North America session, traversing inside of 1.0575-95. A layer of bids from 1.0570 was noted, while sellers were in place from 1.0600. We suspect more of the same will be the case into Wednesday's FOMC meeting, though with holidays approaching, and liquidity beginning to dry up, one-off order flow could result in some choppy and surprising moves.

    Paste link in email or IM