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By XE Market Analysis December 19, 2013 2:13 pm
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    XE Market Analysis: Asia - Dec 19, 2013

    The dollar was mixed in N.Y. trade on Thursday, though was in a relatively narrow range overall. The USD index held the bulk of post-FOMC gains, as the greenback perked up some against the euro. USD-JPY was steady over 104.00, while USD-CAD faded after posting multi-year highs over 1.0700. Cable looked soft in early trade, though managed to recover, while USD-CHF maintained altitude over 0.8950. Incoming data was mixed, revealing higher jobless claims, and slightly soft existing home sales. Leading indicators were firm however, as the Philly Fed index ticked higher, though missed expectations.

    [EUR, USD]
    EUR-USD extended post-Fed losses to a two-week low of 1.3649 in Asian trade. Gains in N.Y. were limited to 1.3688 early in the session, before the pairing found support into 1.3650. Stops are expected to be a factor under the level. Some euro selling was noted after the 10:00 EST options cut, with 1.3650 expiries reported. The euro's recent failures above 1.3800 has painted a technical picture of waning upside momentum.

    [USD, JPY]
    USD-JPY surged and broke above the recent peak of 103.92 to a new major-trend peak of 104.36, subsequently ebbing back to the 103.90 area during the Tokyo session. It reclaimed the 104.00 handle in Europe, and was supported over the figure through the N.Y. session. Ranges were narrow however, with 104.10 to 104.26 containing the pairing. Firmer U.S. yields should continue to weigh on the yen.

    [GBP, USD]
    U.K. policymakers likely to be considering FX intervention. The BoE minutes to the Dec MPC meeting noted that, "any further substantial appreciation of sterling would pose additional risks to the balance of demand growth and to the recovery." While cable was soft in early trade, it recovered smartly through the London close, trading back toward 1.6390. The pairing came within a hair of meeting our 1.6500 target post-FOMC, and unless another move over 1.6400 doesn't occur quickly, we look for further downside potential.

    [USD, CHF]
    The CHF has established a weakening path in the wake of the FOMC's stock market friendly announcement, and the currency's safe haven premium is eroding now that the period of Fed policy uncertainty is over. EUR-CHF breached 1.2250, well up on the pre-Fed eight-month low of 1.2166, and looks biased to 1.2280 resistance, which marks a series of former lows seen between October and November. Support is now at 1.2220 and 1.2200. USD-CHF faces some resistance at 0.8960-70 and again at 0.9000, but can be expected to breach these over the coming sessions.

    [USD, CAD]
    USD-CAD gave back the 1.07 handle by mid-morning, after peaking at multi-year highs of 1.0727 in London. European fund offers were seen over the figure, reportedly to fund Canadian commodity plays on hopes for improving North American growth. With the post-Fed USD rally appearing to have about run its course now, further USD-CAD downside can be expected as profits are booked. The pairing faded through the afternoon, basing at 1.0667.

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