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By XE Market Analysis June 4, 2014 2:54 pm
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    XE Market Analysis: Asia - Jun 04, 2014

    FX trade was very quiet through the Wednesday session, as markets girded for the ECB meeting on Thursday, and the U.S. jobs report on Friday. The dollar managed modest gains through the day, despite the modest ADP miss, and widened trade deficit. A bright spot was a better than expected non-manufacturing ISM headline. EUR-USD slipped from highs near 1.3640 to touch a low of 1.3598, while USD-JPY stumbled initially to 102.45 lows before matching London's 102.74 high. We look for very quiet trading conditions to persist overnight.

    [EUR, USD]
    EUR-USD drifted lower through the session eventually flirting with the 1.3600 level, touching 1.3597 lows, and staying under 1.3610 through the afternoon. We suspect the recent low of 1.3586 and high of 1.3650 will be safe into Thursday's ECB meeting. Market positioning appears to have balanced somewhat into the meeting, with a good number of euro shorts flushed out over the past week. As a result, reaction to the ECB could be fairly robust.

    [USD, JPY]
    USD-JPY eased into 102.45 after the trade data, though perked back up to 102.74 highs following the better ISM print. The pairing then steadied near 102.70 after failing to breach London's 102.74 peak, and Asia's 102.79 high. Today's uptick in Treasury yields helped sentiment, as did the modest upturn on Wall Street, though the road from 102.75 to 103.00 is reportedly very congested with sellers. Into the ECB meeting tomorrow and U.S. jobs report on Friday, we expect the 102.40-80 region to hold up.

    [GBP, USD]
    Sterling rallied in London on the services PMI data, which was better than expected at 58.6 and only fractionally down on April's 58.7. Cable added to gains into N.Y. trade, peaking at 1.6768, before easing back to 1.6735 on the back of a broadly firmer USD.

    [USD, CHF]
    EUR-CHF matched Friday's 1.2195 low in N.Y. trade. The Swiss franc has been quite steady, though geopolitics appears to be calming some, which should allow the CHF to weaken modestly in the days ahead.

    [USD, CAD]
    USD-CAD blipped briefly up to 1.0950 from 1.0925 after the Canadian trade data, where a slowing in exports resulted in a deficit. Into the BoC announcement at 10:00 EDT however, CAD losses were short lived, amd the pairing remained steady near 1.0935 levels. USD-CAD moved higher after the BoC announcement where policy was left unchanged, as expected. The Bank's statement retained the Bank's neutral stance, though indicated slightly increased risks to growth. USD-CAD touched 1.0955 highs, up from 1.0925 into the announcement. Offers were seen into 1.0960, which kept further gains out of reach.

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