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By XE Market Analysis December 22, 2014 1:52 pm
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    XE Market Analysis: Asia - Dec 22, 2014

    FX trade was quiet in N.Y. on Monday, with holiday conditions in full force. The dollar maintained a bod tone, moving to within a few points of 120.00 versus the yen, though unable to add to overnight gains versus the euro. USD-CAD was supported by another sell-off in oil prices, and natural gas' slide to near two-year lows, while cable idled between 1.5600 and 1.5640. On the economic front, the Chicago Fed index was slightly improved, though existing home sales missed the mark. Neither had much market impact. Wall Street rallied again, while Treasury yields were fairly steady.

    [EUR, USD]
    EUR-USD remained steady, managing a 1.2266 high and a 1.2241 low through the N.Y. session. Traders reported light flows, and we may have seen the range into the close. Tuesday's U.S. session may give the market a last chance for some FX price action before the Christmas break, as the U.S. calendar is quite busy. Releases will include GDP revisions, durables, personal income and new home sales. In the meantime, support is in place at 1.2220, with resistance at 1.2280.

    [USD, JPY]
    USD-JPY came up short of the 120.00 mark, stalling at 119.96. Downside since then however, has been limited to the 119.85 level, which came after the U.S. housing data. The better risk backdrop continued to be a dollar supportive factor, though solid Japanese exporter backed offers, along with noted option related selling interest, could keep the 120 handle out of reach for now.

    [GBP, USD]
    We continue to class Cable as being in a bear trend, which has been persisting since the July cycle high at 1.7192. Resistance is now marked at 1.5684 (20-day moving average) and 1.5700, support at 1.5500. The August 2013 low at 1.5102 should be in the crosshairs of bears. The drop in UK inflation to a six-year low of 1.0% has strengthened the dovish voices at the BoE's MPC. Cable traded between 1.5602 and 1.5630 through the N.Y. session, and light liquidity could see the pound test the figure below near term.

    [USD, CHF]
    EUR-CHF spiked toward 1.2100 from the 1.2010 area last week after the SNB implemented a negative interest rate of -0.25%. The cross has since edged lower from 1.2045 and appears set to remain in a narrow range on either side of 1.2030.

    [USD, CAD]
    USD-CAD made its way to 1.1645 highs, above Friday's 1.1635 peak, but shy of Thursday's 1.1648 top. Congestion remains inside the 1.1670-80 band, which provided a top the first half of last week. WTI crude has likely been the main driver this morning, with prices there dropping from near $58.50 overnight, to lows under $55.20. The firmer risk backdrop offset to a degree, though further erosion in oil prices could see recent USD-CAD highs tested again.

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