Home > XE Currency Blog > XE Market Analysis: Asia - Jul 15, 2013


XE Currency Blog

Topics7618 Posts7663
By XE Market Analysis July 15, 2013 2:28 pm
    XE Market Analysis's picture
    XE Market Analysis Posts: 5542
    XE Market Analysis: Asia - Jul 15, 2013

    The dollar traded on a mostly easier footing through the N.Y. morning session on Monday, though ahead of Bernanke's House testimony on Wednesday, activity was somewhat muted. Weak ex-auto June sales put a damper on dollar buying early on, resulting in EUR-USD jumping to 1.3050 after failing to make any downward progress under 1.3000. USD-JPY gave up the 100 handle after the data, though managed to recover later in the session. FX trade is liable to be relatively slow into Wednesday morning, though EUR-USD upside may attract into Bernanke's testimony, as risk is taken off the table ahead of potential volatility. The downside has held up considering the rise in Eurozone uncertainty and the persistent push into 1.3000. However, we think market nerves will run high, and reduction in dollar longs could lift the EUR back through 1.3100 to revisit 1.3150.

    [EUR, USD]
    EUR-USD moved back to the top of its N.Y. range near 1.3050, after failing to make downside progress under 1.3000 earlier. Sovereign buyers were noted sub-1.3000, while softer U.S. sales data supported. The piaring later took out noted stops at 1.3060 on its way to 1.3076 highs. More stops over 1.3080 were kept out of reach, though support appeared to be building from 1.3030. A headline crossed the wires at the time, with ECB's Asmussen saying the Bank will react to any whiff of inflation. The comment likely had limited impact on the euro, with the rally apparently stop loss driven.

    [USD, JPY]
    USD-JPY drifted back into 100.00 as close-to-market bids held the downside from 99.80. The underlying tone is positive since USD-JPY rallied out of 99.25 during the European morning and short term funds have left a layer of support from 99.70-80 back towards the 99.05 area. The technical backdrop is very positive in the short-term, but repositioning and event risk will be more pivotal in the first half of the week. Short term dollar buyers may find that exporters returning from today's Japanese market holiday use any dollar upturn to execute hedging needs. Heavy resistance is noted from 100.50 to 101.00 in the short term.

    [GBP, USD]
    Cable was stuck at 1.5100, where option expiries rolled off at 10:00 EDT. . Option maturities only had the opportunity to exert an influence on today's action after U.S. data, which weighed broadly on the dollar tone. The disappointing retail sales data lifted Cable out of 1.5040 to highs of 1.5115, where Middle Eastern account sell-interest went through during the European morning. EUR-GBP was net unchanged after it was unable to sustain the earlier lift to 0.8665 on corporate demand. Today's move in either direction suggests more indecision for the cross. However, into Wednesday's testimony from Bernanke we think the dollar is likely to guide action ahead.

    [USD, CHF]
    EUR-CHF edged higher. After hitting lows of 1.2348 late Friday it was on the rise today as risk appetite improved. China Q2 GDP provided positive impetus for stocks, which weighed on the CHF. A EUR-CHF move through 1.2380 was accompanied by USD-CHF gains out of 0.9455-60 back over 0.9500. The dollar is more likely to drive action in the coming sessions given the Humphrey Hawkins testimony from Bernanke on Wednesday. Ahead of then, background Eurozone risk could limit the scope for extended EUR-CHF upside. The cross has quite a strong correlation with Eurozone bond spread yields and since they widened, hot money flows have moved back into the CHF. The 1.2400 area will provide interim resistance.

    [USD, CAD]
    USD-CAD caught a bid in London, following the greenback's broad gains. The pairing peaked at 1.0430, up from overnight lows around 1.0380. Offers were seen in place at 1.0440-50, though stops will be a factor above the level. The pairing dipped back to 1.0400 after soft U.S. sales data, where it found very good support. Light afternoon dealings took USD-CAD back to 1.0425, though from here, upside may be in focus into the BoC policy announcement on Wednesday.

    Paste link in email or IM