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By XE Market Analysis January 15, 2014 3:13 pm
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    XE Market Analysis: Asia - Jan 15, 2014

    The dollar firmed into the N.Y. open, and continued marginally higher overall through the morning session. Hotter PPI and a stronger Empire State index helped sentiment, and risk appetite ramped up again on Wednesday, taking equities sharply higher, while supporting Treasury yields. Later in the session, the Fed's Beige Book for the January FOMC meeting was released, and expressed a slightly more upbeat take on the U.S. economy. The report was in-line with expectations however, and had little market impact.

    [EUR, USD]
    EUR-USD stumbled under 1.3600 following the U.S. data, basing at 1.3582, after opening near 1.3615. Buyers remained under the figure, though the lack of bounce through the session would lead some to believe the downside may be opening up now. Last Thursday's 1.3549 low could be a key support level, with a break there expected to see 1.3520-00 targeted.

    [USD, JPY]
    USD-JPY popped to 104.51 highs after the U.S. data, though was stopped in its tracks by a band of selling interest from the 50 level. The pairing pulled back marginally, and had a tougher time to the upside, given reports of good offers in place from 104.70 up to 105.00. Japanese exporter offers, which were in place over 104.00 on Tuesday, apparently moved up over 104.50, though the pairing ground its way up to 104.69 through the afternoon on improved risk and higher U.S. yields.

    [GBP, USD]
    Sterling came under some pressure soon after the New York open, which saw Cable shed over 50 pips in dipping under 1.6350 while EUR-GBP punched above 0.8300 to a 0.8328 high so far. Cable saw stop loss orders triggered through 1.6350 and the Jan-6 low of 1.6337, which sent the pair to a new low for the year of 1.6326. There are some research notes in circulation that are arguing that the pound is overvalued, including from BNP, which we think makes sense following CPI figures that showed inflationary pressures to be rapidly unwinding and real sector data and survey evidence that have shown that the economy hasn't been sustaining recovery momentum as well has had been thought.

    [USD, CHF]
    EUR-CHF has been trending higher the past several session, with better risk levels weighing on the CHF. With the dollar's trend overall higher this week as well, USD-CHF has again tested the 0.9100 level, and has found support over 0.9050. As long as U.S. data continues its improving path, the CHF should stay under some moderate pressure for the time being.

    [USD, CAD]
    USD-CAD rallied to new trend highs of 1.0991 in London trade, as the pairing followed the greenback's general trend higher overnight. Heavy offers were noted ahead of the psychological 1.1000 level, where barrier options were defended. As usual, stops were reported over the figure, though never came under attack. Risk appetite remained in positive territory, which prompted some USD-CAD profit taking. The pairing eased back to 1.0920 lows into the London close, before recovering back to 1.0950.

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