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By XE Market Analysis February 18, 2014 4:31 pm
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    XE Market Analysis: Asia - Feb 18, 2014

    The dollar was mostly lower in N.Y. trade on Tuesday, taking EUR-USD to one-month highs over 13770, and seeing USD-JPY give back some of its post BoJ gains, settling in near 102.30. USD-CAD was a bit softer on better risk taking, and higher commodity prices, though remained solidly inside of recent ranges. On the economic calendar, the Empire State index slumped, while NAHB housing sentiment took a tumble. December TIC data revealed a sharp outflow. Equities were mixed, while Treasury yields edged to the lower end of their recent ranges. Incoming U.S. data has been on the soft side of late, and should this trend continue, the dollar may remain under modest pressure.

    [EUR, USD]
    EUR-USD touched 1.3770 highs in the aftermath of the softer U.S. data releases, levels last seen on January 2. Sellers were noted stepping in under 1.3775 which was the January 2 high, though stops are now seen at 1.3780. Defense of barrier options at 1.3800 is anticipated, and may thwart euro bulls for now. Bigger picture, the multiple rejections from 1.38+ levels from last October had been associated with a notably drop in momentum following a six-month rally phase.

    [USD, JPY]
    The dollar slipped back a touch following the softer Empire State headline, pushing USD-JPY down 10 points to 102.35, from its opening levels near 102.60. The pairing later touched 102.25 lows, though found support in the aftermath of BoJ actions overnight, and a steady risk backdrop. Dip buying is expected into the 102.00 level, which is becoming decent interim support.

    [GBP, USD]
    Cable found support on the coattails of EUR-USD, recovering to a 1.6728 high so far from earlier sterling-driven weakness that left a low at 1.6654. Selling interest is reported into 1.6740. U.K. data and events loom tomorrow, with the November-December labour market report and BoE minutes to the February 5th-6th Monetary Policy Committee meeting due. The BoE's de-emphasizing of the unexpectedly quick drop in the unemployment rate will lessen market interest in the labour data.

    [USD, CHF]
    EUR-CHF halted the recent decline toward the 1.2200 area as global stock markets rebound and the safe haven premium of the Swiss currency unwinds. The Dec-17 cycle low of 1.2167 has slipped back out of scope. Support is marked at 1.2206 (the Feb-13 low) and 1.2200. SNB-speak this month has affirmed that a removal of the 1.20 limit would only be considered if inflation was much higher had little impact. We wouldn't advise speculative accounts to hold long CHF exposures below 1.2100 given the threat of SNB intervention ahead of 1.2000.

    [USD, CAD]
    USD-CAD flirted with intra day lows at mid-morning, with selling picking up on the move under the 1.0955 level. The pairing based at 1.0940 later in the session, though with bids noted at 1.0940-30, downside follow through could be limited going forward. Firmer oil and gold prices were CAD positive, though recent ranges held up through the session today.

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