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By XE Market Analysis June 7, 2013 2:34 pm
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    XE Market Analysis: Asia - Jun 07, 2013

    The dollar managed to move higher on Friday in N.Y. dealings, following a slightly better than forecast May employment report. The markets had priced in risks for a weaker NFP outcome, and when that didn't materialize, the dollar, equities, and Treasury yields all rose. EUR-USD jerked up to 1.3285 after the data, before touching lows near 1.3190. USD-JPY meanwhile, gapped inside a 250 point range in extremely volatile trade, moving just under 85.00 before recovering over 97.50. The CAD rallied on a very strong Canadian jobs report, trading under 1.0200, before recovering some on general USD strength.

    [EUR, USD]
    EUR-USD trended lower after stops were hit on both sides of the market following kneejerk dollar moves over the NFP report. Buy stops were triggered above 1.3280 and the pair lurched lower through 1.3220 sell stops as the dollar steepened with U.S. yields, which are benefiting on stock gains amid relief over Fed policy expectations. EUR-USD continued to find support under 1.3200 through the session, though standing stops are seen at 1.3180, and a break could see 1.3130 targeted in Asia on Monday.

    [USD, JPY]
    USD-JPY traded all over the shop after the jobs data, initially rallying to 96.40, before collapsing to 94.99. Barriers at 95.00 were knocked out, with heavy option back buying emerging at the lows. Japanese agency names were buyers as well, and the combination of bids and no liquidity resulted in a rally back to 96.35 early on. The pairing later filled in buy stops as U.S. account dollar demand continued to go through. The first batch of stops gave way through 97.00 and more were noted above the top of the Ichimoku cloud around 97.30-35. The pair will still look vulnerable if it closes under the cloud top at 97.32, but the rebound from 95.00 and move back above the bottom of the Ichimoku cloud at 95.40 will be seen as a positive.

    [GBP, USD]
    Cable edged higher on long position building under 1.5500 after the N.Y. options cut, where 1.5500 maturities rolled off. The rush for USD knocked Cable from 1.5600 to 1.5490 as order book bids were filled in between 1.5550 and 1.5500. Central bank interest to sell Cable was noted on the way down; likely one of the more active players that is noted on either side of the market. Cable also benefited from GBP-JPY flows. The cross rebounded from post-NFP lows of 148.17 to trade back through 151.00 as USD-JPY pushed back through the 97.30 level. Price action should slow beyond the London close after the very volatile trading conditions since Thursday, but on net Cable has had an impressive week amid a clean sweep of better U.K. data and a steady hand from the BoE.

    [USD, CHF]
    EUR-CHF traded close to 1.2300 as European markets trade quietly following the sharp moves seen since the ECB press conference on Thursday. The meltdown in carry trades left the CHF supported on dips, which limited EUR-CHF's ability to rise. Following the U.S. jobs report though, USD-CHF rallied to near 0.9375, which allowed the cross to move up to 1.2380 from opening levels near 1.2280.

    [USD, CAD]
    USD-CAD took a nose-dive after the twin U.S./Canada employment reports, trading under 1.0170 from 1.0240. The outsized Canadian jobs add was responsible for the bulk of the CAD rally, though there was a bit of a sigh of relief from the U.S. side as well. USD-CAD later rebounded back toward 1.0220, as the greenback overall posted gains.

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