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By XE Market Analysis June 17, 2013 3:24 pm
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    XE Market Analysis: Asia - Jun 17, 2013

    FX trade was light in N.Y. on Monday, with narrow ranges dominating through the session. The kickoff of the G8 meeting in Ireland, plus the upcoming FOMC announcement on Wednesday combined to keep activity on the low side. U.S. data was better than forecasts, and saw the Empire State index and the NAHB housing market index ramp sharply higher. Equities responded positively taking major averages up over 1%. EUR-USD peaked just shy of 1.3360, and based at 1.3330, while USD-JPY meandered inside a 94.70 to 95.02 trading band, moving briefly over 95.00 following G8 headlines, where world leaders continue to back Japan's stimulus efforts. Cable eased back to 1.5700 after running into sellers at 1.5750, while USD-CAD mostly traded inside of 1.0160-80, before retaking the 1.02 handle late in the day.

    [EUR, USD]
    EUR-USD moved to session highs near 1.3360, after modest losses following the better Empire State print unwound quickly. With Wall Street adding to opening gains, upside was limited. In addition, option strikes around 1.3350 kept the pairing fairly level. The dollar perked up again after the much better housing data, with EUR-USD slipping to 1.3340 from 1.3350. Along with the data, the N.Y. option cut featured 1.3350 expiries. Downside was limited to 1.3330 in light afternoon trade.

    [USD, JPY]
    USD-JPY threatened 95.00 over the U.S. data, but struggled to sustain higher levels. A large 95.00 option expiry fueled steady dollar supply on upticks in early trade, along with standing exporter offers from 95.30 to 95.50. USD-JPY later rallied to session highs over 95.20 from just under 95.00, following headlines from the G8. It appears the world leaders continue to back Japan's current stimulus efforts, opening the door for yen weakening. Natural bids lie into 94.50 and the 94.00-20 region, though not thought to be large in size. More influential Japanese bids are seen under 94.00, where USD-JPY found a base last week.

    [GBP, USD]
    Cable breached 1.5750 option barriers. The dollar trended lower today in low volumes as larger flows were kept to the minimum ahead of the FOMC meeting. Cable benefited from the recent improvement in U.K. fundamentals, which has backed expectations for steady monetary policy for the foreseeable future. The recent run of better data also reinforced investment inflows and saw a series of key resistance levels give way over the last several weeks. Cable ran out of gas over 1.5750, and slid back under 1.5800 into the London close.

    [USD, CHF]
    The CHF is still settled at slightly easier levels than we've seen of late as risk appetite ended last week on a more positive footing and this tone carried into today's session. EUR-CHF firmed to 1.2360 and USD-CHF ws underpinned ahead of 0.9225. Interest to run long USD-CHF positions ahead of this week's FOMC meeting and SNB policy outcome was evident last week and this should keep the dollar pairing stable. The SNB are expected to maintain the current policy stance, but there has been intense speculation in recent weeks that the Fed could begin to taper QE later this year.

    [USD, CAD]
    After opening the session near 1.0160, USD-CAD took a quick look over 1.0175 into the London close, though was pushed back under 1.0170. Offers from 1.0180 influenced, with sellers stepping in just ahead of the level. Ranges remained narrow, though 1.0180 offers were eventually filled in alowing the pairing to head back over 1.0200 into the close.

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