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By XE Market Analysis January 6, 2015 3:13 pm
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    XE Market Analysis: Asia - Jan 06, 2015

    The dollar fell against the yen and euro in N.Y. trade on Tuesday, though firmed up against the CAD and sterling. EUR-USD found good support under 1.1900 in morning trade, and when Wall Street fell sharply again, along with oil prices, the euro managed highs over 1.1950. USD-JPY meanwhile, was not happy with the risk-off backdrop, and fell under 118.10, from highs near 119.20 at the open. USD-CAD moved over 1.1920 on oil's continued collapse, as WTI crude traded under $47.75. Cable remained in sell-mode, falling to 1.5153, and in sight of the August, 2013 low of 1.5103. U.S. data didn't help sentiment, as both factory orders and services PMI missed market expectations. All markets appear to be impacted by oil prices in near free fall, and until crude prices stabilize, more volatility is likely in the cards.

    [EUR, USD]
    EUR-USD held above Monday's 1.1860 low, basing at 1.1885 before reclaiming the 1.19 handle. The meltdown on Wall Street, receding yields, and general risk-off allowed the pairing to trade over 1.1955 after the London close. The euro remains in sell the rally mode however, with offers now said to be thick from 1.1950. Large stops are expected under 1.1860, which if triggered can be expected to result in a test of the February, 2006 low of 1.1825.

    [USD, JPY]
    USD-JPY succumbed to the risk-off landscape again on Tuesday, falling under 118.10 lows, as Wall Street tanked, and 10-year Treasury yields fell to 1.90%, levels last seen in May of 2013. Stops are expected under 118.00, though real money bids are seen into the figure now. It appears the oil market is unsettling all markets, with WTI crude now under $48/bbl.

    [GBP, USD]
    Cable dropped back below 1.5200 in London in the wake of the big services PMI miss, dropping to 1.5183 and the market looks set to test yesterday's Asian-session nadir at 1.5163. Cable remained in sell-mode in N.Y., falling to 1.5153, and in sight of the August, 2013 low of 1.5103.

    [USD, CHF]
    EUR-CHF fell to a nearly three-week low of 1.2010 after spiking to a 1.2096 peak Dec-18 after the SNB implemented a negative interest rate of -0.25%. SNB member Zurbruegg recently argued that a negative interest rate would be an effective tool as permanent excess liquidity in the Swiss financial system exceeds 300 billion francs. SNB boss Jordan had said recently that upward pressure on the franc has "intensified," and the central bank said it will enforce the cap with "utmost determination" and is prepared to take further steps if necessary. USD-CHF meanwhile, fell back to 1.0044 on general risk aversion.

    [USD, CAD]
    USD-CAD ran up to session highs of 1.1792 early on, as oil prices declined further, and as risk appetite was anything but robust. Sellers were reported from 1.1800, though a further downdraft in WTI crude to near $47.50 saw USD-CAD trade over 1.1820. Monday's 1.1842 trend high will be the next upside target. Stops are up at 1.1850, though appear to be safe for the time being.

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