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By XE Market Analysis July 8, 2013 2:53 pm
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    XE Market Analysis: Asia - Jul 08, 2013

    FX trade was very quiet in N.Y. on Monday, with ranges generally narrow. This said, the greenback did lose modest ground, with EUR-USD edging toward 1.2880 from 1.2840, and USD-JPY slipping under 100.80 from highs near 101.20. The modest pullback in Treasury yields may have weighed down the greenback to an extent, though some paring of long positions was noted following last Friday's dollar gains. Wall Street rallied, and focus there will turn to earnings season, which kicks off after the close. There was no economic data to move markets, and Tuesday will bring an empty calendar as well.

    [EUR, USD]
    EUR-USD's rise from 1.2840 was stopped by standing offers from 1.2880, and intra day position squaring saw the pairing ease back toward 1.2850. Trade was light, though the euro remains in sell-the-rally mode. To the downside, barrier option defense is expected in front of 1.2800, though we look for an eventual test of 2013 lows at 1.2745, with a break there opening up a move to November 2012 lows of 1.2660.

    [USD, JPY]
    USD-JPY traded on a slightly softer footing through the N.Y. session, though ranges were narrow. The pairing managed lows just under 100.80, after running into sellers ahead of 101.20. Dip buying is likely to continue, though, as the rise in U.S yields feeds macro fund demand. This said, an overhang of Japanese exporter offers from 101.50 may slow eventual gains.

    [GBP, USD]
    GBP extended gains on short covering. Cable edged out 1.4950 intra-day highs and EUR-GBP backed away from 0.8625-30 to 0.8605. According to weekend press reports, Singapore's sovereign wealth fund could be in the hunt for the 10% stake in Lloyds and there were reports that a consortium could bid for a 20% stake. On Friday, Cable was helped off the lows by news that the Treasury is looking at various interested parties in Lloyds from overseas. Given the current levels in Cable it wouldn't surprise us to see interested parties loading up on GBP in anticipation of a deal.

    [USD, CHF]
    EUR-CHF consolidated after it cleared 1.2400 for the first time in nearly a month. It has maintained a supportive tone since it bottomed out just under 1.2220 on June-24, where good long-term money emerged. EUR-CHF benefited on today's EUR correction, but in recent weeks its impetus came from dollar strength. USD-CHF pulled back a bit today after it ran into congestion around 0.9650-60. However, the bias is still on higher levels and another push on 0.9700 barriers. Long term macros are still happy to play for a run through parity into Q4.

    [USD, CAD]
    USD-CAD came off its best levels, trading quietly at 1.0550, after peaking at 1.0585 in London. Firmer equities provided some weight on the pairing, while weaker oil and firmer gold prices were about a wash. Bids were seen down to 1.0530, while offers were in place from 1.0600. The pairing later rebounded to 1.0580, though activity was light through the afternoon.

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