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By XE Market Analysis December 20, 2013 4:14 pm
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    XE Market Analysis: Asia - Dec 20, 2013

    The dollar pulled back some in N.Y. trade on Friday, as pre-weekend and pre-Christmas week profit taking set in. EUR-USD briefly breached the 1.3700 mark, though was unable to hold the handle, closing near 1.3670. USD-JPY meanwhile, edged under 104 for a short while, before reclaiming it into the close. The upwardly revised Q3 GDP headline helped Wall Street sentiment, taking the S&P 500 and the DJIA to record highs. We expect the next two-weeks to slow to a crawl as far as FX volumes are concerned, though the lack of liquidity could still result in some silly price action.

    [EUR, USD]
    EUR-USD logged a new two-week low to 1.3625 after breaching yesterday's 1.3651 base. This occurred as the USD extended to fresh post-taper highs against some currencies before settling. N.Y. trade saw the euro pick up some ground on profit taking ahead of the holidays, though while EUR-USD breached 1.3700, it was unable to hold the figure, closing near 1.3670.

    [USD, JPY]
    The dollar jerked broadly higher after the higher GDP revision, taking USD-JPY to new trend highs of 104.63.The gains didn't last however, as profit taking weighed. The pairing dipped briefly under 104.00 into the London close, though settled over the figure into the close. Dip buying is expected to continue, as the 105.00 level continues to be touted as a near term target.

    [GBP, USD]
    Cable made its way to 1.6395 from post-GDP lows of 1.6315. Standing offers were in place yet again into the 1.6400 level, and the pairing was pushed back toward 1.6325 into the close. S&P affirmed the U.K. 's triple-A rating but kept a negative outlook, saying that the country would be vulnerable to a downgrade if growth was not sustained.

    [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. Resistance comes in at 1.2280, marks a series of former lows seen between October and November. Support is now at 1.2220 and 1.2200. USD-CHF faces resistance at 0.9000, but can be expected to breach this over the coming sessions.

    [USD, CAD]
    USD-CAD posted new trend highs of 1.0737 after the upgraded U.S. GDP outcome, and tame core Canadian CPI. though eased back to 1.0700 in subsequent profit taking. Sellers in the form of fund accounts were again reported into the highs, while defense of 1.0750 barrier options was noted as well. Bids are seen in place from 1.0670 to 1.0650.

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