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By XE Market Analysis January 22, 2014 2:34 pm
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    XE Market Analysis: Asia - Jan 22, 2014

    FX trade was mixed in N.Y. on Wednesday, and a bit choppy as well, with a fair number of people away from the office due to a snowstorm in the Northeast. There was again nothing on the economic calendar to move markets, and the dollar came under some early pressure, as equities sold off. As losses on Wall Street eased however, the greenback recovered some against most major currencies. EUR-USD peaked at 1.3584 early on, before touching 1.3539 lows. USD-JPY slipped from early highs over 104.50, easing back under 104.25, before climbing back over 104.45. Cable remained strong following better U.K. employment data, easily maintaining the 1.6550 level. USD-CAD vaulted to new trend highs over 1.1080 after a dovish BoC statement.

    [EUR, USD]
    EUR-USD rallied up over London highs, touching 1.3577 early in the session. There was talk of a large buy order put through in early N.Y., though offers returned into the Asian peak of 1.3580. Selling interest was seen up to 1.3600, with stops building above. The pairing later responded some to the improving conditions on Wall Street, easing back down to N.Y. session lows under 1.3540. The pairing found bids ahead of the London loses of 1.3535, though more buyers were noted from 1.3520.

    [USD, JPY]
    USD-JPY was rangebound in N.Y. on Wednesday, remaining between 104.20 and 1.0450 in quiet trade, following the BoJ announcement overnight. The BoJ left policy unchanged and recommitted to its expansive stance, which went down well in stock markets in Asia. The BoJ downgraded its 2014-15 growth outlook to 1.4% from 1.5%, and forecasted CPI at 1.3% this financial year and 1.9% next financial year.

    [GBP, USD]
    Sterling surged nearly 100 pips on the U.K. labour data, with Cable making a peak of 1.6552, the highest level seen since Jan-3, before steadying. EUR-GBP shed about 50 pips in making a fresh one-year low of 0.8181. U.K. unemployment unexpectedly dropped to 7.1% in November, contrary to the market expectation for an unchanged 7.3% reading and driven by a solid 288k rise in employment. Cable added to gains in N.Y. dealings, running up to 1.6587 highs.

    [USD, CHF]
    EUR-CHF has consolidated gains above 1.2300 after recovering from the Dec-17 low of 1.2166. Price action has been pretty choppy over the last couple of weeks, but overall we expect the currency to remain on a bigger-picture softer footing as a consequence of the unwinding in the Swiss currency's safe haven premium as the period of Fed policy uncertainty ended with its decision to commence QE tapering. Resistance comes in at 1.2400, support at 1.2320 and 1.2300.

    [USD, CAD]
    USD-CAD rallied strongly to trend highs over 1.1080 from near 1.0970 following the dovish BoC announcement, where the statement said downside risks to inflation have grown in importance. The bank said the C$ remains strong, though its recent weakening trend should help Canada's export sector, especially when combined with stronger U.S. demand. USD-CAD resistance is now seen at 1.1100. A lower CAD is the icing on the cake, according to BoC Governor Poloz, where improvement in the U.S. economy is "the cake." The BoC governor has continued to talk the currency lower in the post-MPR press conference, even as he denied political pressure to do so. On the policy bias, Poloz regarded the Bank's stance as still in the neutral zone, but the needle has shifted in the zone, with the Bank more concerned about inflation than three months ago.

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