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By XE Market Analysis February 5, 2015 2:30 pm
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    XE Market Analysis: Asia - Feb 05, 2015

    The dollar was largely on a negative slope through most of the session, as EUR-USD made its way from 1.1397 lows, to peak at 1.1497 in afternoon trade. USD-JPY eased steadily from 117.55 to 117.25 lows, before rebounding. A EUR-JPY buying surge reportedly hit the market, taking the cross over 1.3510, and lifting both USD-JPY and EUR-JPY in the process. USD-CAD sank on the rebound in oil prices, and a combination of a narrowing Canadian trade deficit, and a widening U.S. deficit. Cable hovered near 1.5300 for most of the day, though was dragged to 1.5343 highs when EUR-USD rallied. Elsewhere on the economic front, weekly jobless claims were a touch lower than forecasts, while Q4 productivity disappointed. Overall, some signs of the dollar topping out, at least for now, as Fed rate lift-off remains a big question for the market, given some slowing in growth, the lack of inflation, some of which being blamed on the dollar's strength.

    [EUR, USD]
    EUR-USD held a narrow N.Y. trading range through the morning session, staying between 1.1392 and 1.1453 into the London close. Greek uncertainty has largely kept the pairing in check. EUR-USD later popped to 1.1499 highs after breaking the previous session high of 1.1453. Intra day stop loss buying was the likely culprit, though EUR-JPY reportedly was the driver behind the latest dollar move, with the cross ramping up to 135.15 after breaking 134.50, which represented intra day resistance on the hourly chart. The cross move dragged USD-JPY up to session highs of 117.60, and EUR-USD to a peak of 114.99.

    [USD, JPY]
    USD-JPY maintained altitude over 117.00, though struggled over the 117.50 level. The risk and yield backdrop remained supportive today, though with BoJ uncertainty, and some signs of the dollar topping out as the Fed outlook remains muddled, it appears the 115.85 to 118.85 range seen through 2015 so far, is set to hold for the time being. EUR-JPY was the late-session driver behind USD-JPY's move from session lows of 117.35 to session highs of 117.60e, with the cross ramping up to 135.15 after breaking 134.50, which represented intra day resistance on the hourly chart.

    [GBP, USD]
    Cable steadied around 1.5300 after an earlier bolt higher, which elevated the pound from the mid-1.52s to a one-month peak at 1.5314. EUR-GBP also fell back below 0.75. The move followed the unchanged BoE policy announcement, though this was hardly a surprise and there wasn't a statement. UK data this week have, however, been solid. Cable touched 1.5343 highs in late N.Y. trade, dragged up by EUR-USD which tested the 115.00 level.

    [USD, CHF]
    EUR-CHF rallied over 1.5% on reported SNB intervention during the European AM, which sent the cross back over 1.0600 after opening in Europe just below the 1.0500 handle. This fits the story reported by an "informed source" of the Tages Anzeiger newspaper earlier in the week, who said that the SNB is initiating a "soft floor" in EUR-CHF at 1.05-1.10. SNB's vice-chairman Danthine last week that the SNB was still "fundamentally prepared to intervene in the foreign exchange market," and that Singapore's SGD basket policy "deserved closer examination." He had also said that the franc was still overvalued, but didn't mention what would be an appropriate level.

    [USD, CAD]
    USD-CAD dipped to 1.2463 lows from over 1.2510 after the 8:30 EST data, where Canada posted a narrower than expected trade deficit, and the U.S. a wider one. Since then, buyers returned, taking the pairing to 1.2521 highs. WTI oil prices firmed up overnight, and with the contract now taking out $50 resistance, CAD buying has returned again. USD-CAD then slid to 1.2394, as crude touched $52.bbl. USD-CAD will likely remain at the mercy of the oil market for some time.

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