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By XE Market Analysis July 25, 2014 2:25 pm
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    XE Market Analysis: Asia - Jul 25, 2014

    The dollar rallied modestly, but broadly in N.Y. on Friday, as weak German Ifo data combined with EU threats of further Russian sanctions, and apparent Russian movement of materiel into Ukraine, to push EUR-USD to new trend lows. The euro's decline set the market up for further dollar buying, which resulted in USD-JPY rallying to nearly three-week highs just under 101.95, and cable moving back toward 1.6770. USD-CAD popped to one-week highs over 1.0820, as a heavy downdraft in risk taking allowed stops at 1.0770 and again at 1.0800 to be tripped up. On the economic calendar, U.S. durable orders were in-line with forecasts, and largely undid last month's steep declines.

    [EUR, USD]
    EUR-USD posted new trend lows of 1.3421, with eyes now on the November 20/21 bases of 1.3415 and 1.3400, respectively. Two-way interest was reported under 1.3440, with fresh shorts seen initiated following the soft Ifo data, countered by pre-weekend short covering. The euro's bounce from the bottom was of the dead-cat variety however, as EUR-USD managed just a 1.3433 high into the close. We suspect the 1.3400 mark will be in the crosshairs on Monday, especially given the prospects for fresh EU sanctions on Russia, and signs of Russia showing further aggression.

    [USD, JPY]
    USD-JPY firmed to nearly three-week highs in early N.Y. trade, USD-JPY added marginally to Thursday's gains, posting a 101.93, two-week high. Japanese exporter offers, along with options backed sellers are likely in place into the 102.00 level, which could further slow upside advances. In addition, risk taking appetite was under some pressure, likely to help yen gains as well. Indeed, USD-JPY dipped back under 101.75 in afternoon trade.

    [GBP, USD]
    Cable touched fresh one-month lows of 1.6962 in London, though good support was seen into 1.6950. The pairing bounced to 1.6990 high in early N.Y. trade, though the 1.7000 mark has become interim resistance. An overly long sterling market may still have some room to unwind, despite the improving U.K. fundamental backdrop, and hawkish BoE stance. Cable eased back into 1.6965 into the close.

    [USD, CHF]
    EUR-CHF remained on either side of the 1.2150 level in N.Y. The situation in Gaza, Iraq and Ukraine are continuing to underpin the Swiss currency's safe-haven premium, though the cross has remained above the Jun-30 low at 1.2133, which was the lowest level seen in three-and-a-half months. Technically, the break of a former uptrend channel support line at 1.2190 opened the way to the mid-1.21s.

    [USD, CAD]
    USD-CAD pushed through the 1.0800 mark, with buyers stepping in over 1.0770. The pairing had topped out in the 1.0760's for the previous six sessions, but deteriorating risk taking levels were been enough to take it to better than one-month highs of 1.0821. Stops were a factor over the figure, while bids reportedly parked at 1.0800, were either quickly filled, though more likely pulled on the break of 1.0770, and on the back of diving equities. The June 20 high of 1.0826 is the next resistance level.

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