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By XE Market Analysis July 24, 2013 2:16 pm
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    XE Market Analysis: Asia - Jul 24, 2013

    The dollar added marginally to early gains after the firmer flash PMI and new home sales outcomes, taking EUR-USD to 1.3200 lows, and filling the post-German PMI release "gap" up over 1.3250. USD-JPY traded on a firmer footing over 100.25, supported by elevated Treasury yields. Later in the session, despite faltering equities, the greenback managed further upside, taking the euro to 1.3180, and USD-JPY toward 100.45. A rumored Germany downgrade made the rounds, though did not appear to have much if any impact on the euro. Overall, FX trade was rather subdued, and it appeared most of the dollar's gains were tied to firmed up Treasury yields.

    [EUR, USD]
    The EUR-USD move down from over 1.3250 early in the session was reportedly the result of real-money selling, which came ahead of large offers in place at 1.3260-70. EUR-USD later bounced back over 1.3235, after finding good buyers into the 1.3200 level. The pairing was unable to crack new highs after testing 1.3200 however, and intra day longs appeared to be losing patience. taking it back toward 1.3200 at mid-day, as London sellers were noted. Later, the euro tripped light sell stops at 1.3200, though selling picked up again on the break under the London low of 1.3190, on its way to 1.3180 lows. Talk of sovereign bids from the 80 level was heard, which could provide interim support.

    [USD, JPY]
    USD-JPY peaked at the N.Y. options cut. It reversed course from 100.44 highs to trade back at 100.05, leaving it unchanged from N.Y. open levels. The pair backed up in line with moves via the other dollar majors and also equity markets, which pulled back from their best levels on the session and provided bonds with a modicum of support. The downturn in USD-JPY, while corrective, should not damage the underlying trend, which is skewed to a test on Monday's highs just over 100.50 and then the mid-101 region. Any dips in USD-JPY are currently being supported by U.S. funds, while Japanese real money have also been good buyers in recent sessions.

    [GBP, USD]
    Cable hung on to 1.5300 due to EUR-GBP flows. Longs that were built up in the cross during the European morning were unwound on EUR-USD heaviness, which fed into the Cable upside. It threatened to break lower as support was eventually filled in from 1.5335 to 1.5325 and printed 1.5315 lows. In the last two sessions it has struggled to benefit from bullish impetus on the daily chart and the lack of progress on 1.5400 is a potential risk for longs.

    [USD, CHF]
    USD-CHF probed the downside early on U.S. account interest. The USD-CHF downturn limited the EUR-CHF rally and it edged off the 1.2400 region back to 1.2370. USD-CHF has traded close to the 200-dma since Monday's break lower and after a period of consolidation it looks poised for softer levels eventually. The dollar inched back toward 0.9390 later however, aided by firming Treasury yields.

    [USD, CAD]
    USD-CAD traded to new one-month lows under 1.0265 in early North American dealings, as improved risk appetite supported the CAD. The pairing filled in noted bids at 1.0270-65, but more were seen into 1.0250, halting the pair's declines. Option and corporate backed buying was expected at the level. With little data from either side of the border, USD-CAD direction was largely determined by equity market developments. Wall Street started firmer, though soon turned red. This helped take USD-CAD back over 1.0320 in afternoon dealings.

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