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By XE Market Analysis July 2, 2013 3:09 pm
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    XE Market Analysis: Asia - Jul 02, 2013

    The dollar firmed up in light N.Y. dealings on Tuesday, though ahead of risk events such as ADP jobs data on Wednesday, and the ECB meeting on Thursday, FX dealings were on the quiet side. In-line May factory orders helped the greenback to a degree, while we suspect the possibility of a military coup in Egypt supported the dollar as well. EUR-USD tested 1.3000 in early trade, before tripping 1.2990 stop into the close, basing at 1.2970. USD-JPY meanwhile, touched 100.75, following Nikkei futures higher. U.S. Equities started off in positive territory, though turned red in afternoon trade, again perhaps due to Egypt issues. The June ADP employment survey will be the driver on Wednesday, where we look for a 150k increase in private payrolls.

    [EUR, USD]
    EUR-USD short covering went through ahead of the London close. European accounts were poised to sell the EUR on a break of 1.2985, where large stops have been in place for several weeks. However, bids reemerged after moving across the 1.3000 area since early on in the N.Y. session. It wasn't until late in the session that EUR-USD broke 1.3000 decisively, trading to 1.2970 in afternoon N.Y. dealings. The pairing had not been to this level since the end of May. Good sell stops were tripped under 1.2990, coinciding with stock market losses ramping up, perhaps on talk of a military suspension of the Egyptian constitution. Traders now target 1.2930 as next support.

    [USD, JPY]
    USD-JPY cleared 100.00 barriers on general dollar strength. Buyers of USD-JPY have been in control since the start of the week and U.S. model funds were good buyers through 100.00 and 100.15, tripping large buy stops. There is more confidence in USD-JPY's upside at the start of the new quarter, which has seen back-to-back gains for the Nikkei and a sharp drop in China money market rates as liquidity returns to normal. Later, USD-JPY ramped up over 100.70 in the latest leg higher and sources pointed to the sharp gains on N-225 futures as the accomplice, if not the cause for the latest run through stops.

    [GBP, USD]
    Cable moved under 1.5150 as a series of support levels gave way from 1.5190 to 1.5165 since the N.Y. session opened. One U.S. name was a standout seller, though Cable has generally tracked movement elsewhere as dollar buying picks up pace. Cable bears could target a push through late May lows around 1.5111 and the psychological 1.5100 level into Thursday.

    [USD, CHF]
    USD-CHF headed higher, aided by a firmer dollar as European stocks came under pressure. USD-CHF found buyers into the 0.9450 area, with fund names tipped ahead of the 100-dma lower down. This provided a prop on the downside since USD-CHF broke higher last week and the bias remains on a sustained move through 0.9500 and resistance at 0.9520.

    [USD, CAD]
    USD-CAD spiked to highs near 1.0575, levels last seen in October of 2011. Stop loss buying was a factor on the move over 1.0550, where noted offers at the level were reportedly pulled. Barrier options are seen at 1.0600, and will likely be defended, while talk of fund backed selling ahead the figure limited gains. Ahead of risk events this week, afternoon profit taking set in, eventually taking the pair back toward 1.0525.

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