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By XE Market Analysis February 11, 2015 2:09 pm
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    XE Market Analysis: Asia - Feb 11, 2015

    The dollar continued on a narrow trading path versus the euro in N.Y. on Wednesday, managing a range of 1.1280 to 1.1320, keeping the 1.1300 mark at dead center. USD-JPY managed new one-plus month highs, peaking at 120.44, just 30 points from 2015 highs, while USD-CAD rallied to within a tick or two of 1.2700, as oil turned lower yet again. There was nothing of note on the calendar, though yields edged higher, supportive of the dollar, with the 10-year edging over 2.00%. Wall Street was steady through most of the session, though sold off into the close.

    [EUR, USD]
    EUR-USD eased back under 1.1300 again, making 1.1280 lows. Traded volumes were said to be light through the morning, with the market's hands tied by the EU/Greece situation. Yesterday's low of 1.1273, and Monday's 1.1271 base should provide support, though stops are likely lurking under 1.1270. To the upside, resistance stands at 1.1330-50. With uncertainty still at high levels regarding the EU/Greece struggle, the FX market is on the fence as to which direction the euro will break, which has kept volatility subdued. Overall though, we continue to look for further EUR losses in the coming weeks, as ECB QE, rising U.S. yield advantage, and perceived better U.S. economic performance combine to weigh on EUR-USD.

    [USD, JPY]
    USD-JPY gains accelerated on the move above 119.96 earlier, which was the January 8 peak. Since then, the pairing has advanced to 120.42 highs, with its eye now on 2015 highs of 120.74, seen on the first trading day of the year. Stops were reportedly tripped up at 120.00 and again at 120.20. Comments from BoJ governor Kuroda at the G20 meeting on Tuesday likely got the latest dollar rally under way, when he said the BoJ's easing program, and weaker yen, ran into no criticism from other central bankers. This implies, more easing could be in the cards in the coming months.

    [GBP, USD]
    Sterling corrected some after outperforming during the London AM session. Cable fell back to the 1.5220 area after failing to test 1.5300, reaching a peak of 1.5299. A large option expiry, said to be worth around a yard of sterling with a strike at 1.5300, reportedly had some bearing. EUR-GBP, meanwhile, rebounded back above 0.7400 after leaving a seven-year low at 0.7385. There is some talk of position squaring ahead of the attest BoE Quarterly Inflation Report, which is due tomorrow and which is likely to suggest that there isn't any rush to hike rates given the rise in real interest rates amid the recent dive in CPI.

    [USD, CHF]
    EUR-CHF has settled in the upper 1.04s after trading as low at 1.0414 earlier this week amid general euro weakness. SNB's Jordan said over the weekend that the central bank is prepared to intervene in EUR-CHF if necessary, that, "We are observing the exchange rate situation as a whole ... If necessary we are active," but, " ... we do not speak about our transactions." He said that the franc remains "clearly overvalued" at around 1.0500, but said refrained to comment on what it considers the preferred franc levels or what it sees as a fair value. An "informed source" of the Tages Anzeiger newspaper last week said that the SNB is initiating a "soft floor" in EUR-CHF at 1.05-1.10.

    [USD, CAD]
    USD-CAD moved back to the top of its intra day range in early trade, peaking under 1.2650. WTI crude prices dipped to session lows, moving under $49.20, and down from early N.Y. levels over $50.00. Further oil declines following a larger than expected inventory build, propelled USD-CAD to 1.2698 highs, as WTI fell to $48.06. Sellers into 1.2700, along with a modest crude bounce, saw USD-CAD slip under 1.2640 into the close.

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