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By XE Market Analysis June 10, 2013 2:39 pm
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    XE Market Analysis: Asia - Jun 10, 2013

    The dollar was mostly softer in N.Y. trade on Monday, though USD-JPY maintained some of its overnight bid tone. There was no U.S. data to drive the FX market, while U.S. equities moved lethargically on either side of flat through the session. EUR-USD made its way over 1.3260 after finding good support into 1.3180, perhaps on the back of Draghi comments, which sounded relatively hawkish (see below). There was little reaction to S&P moving the U.S. sovereign rating to neutral from negative watch. USD-JPY moved up toward 99.30 before stumbling back under 98.70 into the close. Tuesday's U.S. calendar is sparse as well, with just April wholesale data on the docket.

    [EUR, USD]
    EUR-USD moved to session highs over 1.3260 in afternoon trade. The pairing had moved steadily higher since running into solid bids early on ahead of 1.3180. London names were buyers over 1.3230, which represented the earlier European session peak. DJ reported comments from ECB's Draghi, apparently taken from German TV, saying the ECB will not intervene just to keep countries solvent. He said stressed countries should emulate German reform efforts, and he "guarantees" the EU won't inflate its way out of the debt crisis.

    [USD, JPY]
    USD-JPY triggered stops on the way to intra-day highs over 99.25. The dollar move was broad based after S&P revised up the U.S. sovereign rating to stable from negative. Offers from Japanese corporates were filled between 99.00 and 99.20, which protected light stops above. There is more order congestion noted into 99.50 and heavy offers are anticipated towards 100.00. The pairing ran out of steam into London's close, as pre-BoJ profit taking was cited, returning under 98.60. Ahead of tomorrow's BoJ policy decision the USD-JPY downside should remain limited. However, an unchanged policy stance is widely expected. Comments from BoJ Governor Kuroda will be scrutinized after last week's volatility via stocks and FX. We expect him to maintain his dovish credentials and assure market participants that BoJ is monitoring the impact from its recent policy measures.

    [GBP, USD]
    Cable edged up to intra-day highs just over 1.5585. There wasn't much in the way of flows that went directly through Cable, rather EUR-GBP was pressured from 0.8515 to 0.8500 on activity related to an option expiry at 0.8500. EUR-GBP has traded on the heavier side since it broke down late last week to levels under 0.8500, where good corporate support was noted. Meanwhile, Cable is in good shape to make further topside tests in the coming sessions, with 1.5605 an initial pivot. Ultimately, longs will want to see how Cable performs towards 1.5700, where prices topped out last week ahead of the 200-dma at 1.5705-10.

    [USD, CHF]
    CHF traded off equity market moves. A better tone for stocks today briefly boosted EUR-CHF and USD-CHF above 1.2400 and 0.9400, respectively, though follow through has been contained throughout as positioning is still being kept on the tighter side. Both EUR-CHF and USD-CHF chopped in a narrow range until the S&P rating decision provided a fresh fillip for the CHF components. However, EUR-CHFs move from 1.2380 to 1.2420 ran into corporate selling, leaving it close to 1.2400. USD-CHF also experienced limited upside after the rally out of 0.9360 to 0.9420 met profit taking as the upturn fell short of Friday's 0.9434 top.

    [USD, CAD]
    USD-CAD was fairly steady under 1.0200 in early North American trade, finding initial support into the 1.0180 region. Standing bids were noted at the level, with more in place from 1.0160. Sellers were seen from 1.0230. Stronger Canadian housing starts data had little FX impact, and going forward, focus will likely remain on equities and commodity prices. The pairing meandered over 1.0210 at mid-morning, before touching lows of 1.0170 into the London close.

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