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By XE Market Analysis January 29, 2014 3:12 pm
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    XE Market Analysis: Asia - Jan 29, 2014

    FX trade was choppy through the morning, as rate hikes in Turkey and South Africa kept EM fears alive and stoked. The greenback started out on stronger ground, though quickly fell back with equities, and save haven related Treasury buying. The dollar edged higher after the FOMC announcement and taper, which was widely expected, though reaction was fairly muted. Equities were jerked around some, though remained well under water, while Treasury yields did not react very much. EUR-USD dipped under 1.3640 from 1.3675, as USD-JPY climbed toward 102.35 from near 102.00.

    [EUR, USD]
    EUR-USD moved back near session highs over 1.3670 in morning trade, after taking a brief look at 1.3600 early on. Rate hikes in Turkey and South Africa offered just a brief respite from risk aversion, and, as Wall Street opened sharply lower, and Treasury yields fell on safe-haven buying, the dollar was back under pressure. Offers were seen in place from 1.3700, with stops from 1.3750, though as the dollar picked up some ground after the FOMC, EUR-USD eased back to 1.3640.

    [USD, JPY]
    USD-JPY held onto the 102.00 handle for most of the session, though bids were seen lined up down to 101.50. The pairing bounced around on either side of 102.00 after the FOMC, before settling in near 102.20. Risk odd remained in place through the session, as Fed tapering and EM woes remained. As a result, USD-JPY may have further downside room.

    [GBP, USD]
    Cable slipped toward 1.6525 in Morning N.Y. dealings, though as the dollar came under some pressure ahead of the FOMC, it reclaimed the 1.6590 mark. Morning safe haven Gilt buying saw U.K. rates ease back, and likely weighed some on sterling.

    [USD, CHF]
    EUR-CHF slid lower through the session, as safe-haven CHF buying was steady. The cross fell to lows of the year near 1.2213. Traders will be hesitant to push too far under 1.2200, as the SNB will be paying close attention.

    [USD, CAD]
    USD-CAD touched new trend highs of 1.1187 in London, though once again was pushed back toward 1.1100. Heavy selling interest is seen into the 1.1200 level, including defense of barrier options at the level. From there, the pairing boomeranged back to 1.11560, as corporate bids emerged into the lows. Price action remains choppy ahead of the FOMC, and against the backdrop of EM fears, and risk-averse conditions.

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