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By XE Market Analysis January 28, 2014 3:11 pm
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    XE Market Analysis: Asia - Jan 28, 2014

    The dollar slipped back following a very weak durables report, though managed to recover in the aftermath of a better than expected consumer confidence print. EUR-USD made its way to 1.3685 highs before easing back under 1.3660, while USD-JPY dipped under 102.65, and later recovered to hit the 103.00 mark. Equities managed to post decent gains, as the risk off trade appeared to subside some. Afternoon dealings were very quiet ahead of the FOMC announcement tomorrow, and more of the same should be in effect overnight.

    [EUR, USD]
    EUR-USD was jerked higher by soft U.S. durables data, bouncing to 1.3685 from near 1.3640 at the open. Good offers were seen ahead of 1.3700, with option and fund names noted on top. Later, the improved sentiment data helped the dollar generally higher, as some risk taking returned to the markets. Afternoon dealings were very dull, with the euro straight-lining over 1.3650 ahead of the FOMC on Wednesday.

    [USD, JPY]
    USD-JPY slid to near 102.60 from 103.10 on soft U.S. durables, though found support from Japanese names into the lows. Better consumer sentiment saw the dollar later recover back to 103.00, though the pairing appears to be in sell-the-rally mode for now. The technical picture remains bearish for USD-JPY, with last week's price action seeing both the 50- and 100-day moving averages breached along with the completion of a head and shoulder reversal formation, which targets 101.20.

    [GBP, USD]
    Cable touched 1.6614 highs early in the session, though very good selling interest was noted over the figure. Better U.S. sentiment data turned the dollar around generally, which saw cable ease back into 1.6560. We remain mildly bearish on sterling as inflation is low and is biased lower and the BoE committed to its dovish guidance. Support is marked at 1.6500, ahead of the 20-day moving average at 1.6473. Good resistance now seen at 1.6625.

    [USD, CHF]
    EUR-CHF has settled to a consolidation in the mid-1.22s after dropping from 1.23+ levels amid the recent risk-off theme. The FX market will be wary pushing EUR-CHF too far under 1.2200 however, as sustained downward movement will likely illicit a response from the SNB. Support is marked at 1.2240-50, which encompasses lows and the 200-day moving average.

    [USD, CAD]
    USD-CAD posted a marginal new multi-year high at 1.1177, triggering reported 1.1175 barriers, before trimming gains. Expectation that the BoC will maintain a dovish communications strategy has kept a floor under the pair. The Bank is incentivized to maintain a dovish stance, mindful of exports that have disappointed and increasing risk of disinflation. Further barriers have been reported at 1.1200, though a band of sellers under 1.1180 stopped further gains. The pairing only pulled back to near the 1.1150 region, where Asian based bids were reported.

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