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By XE Market Analysis June 26, 2013 2:26 pm
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    XE Market Analysis: Asia - Jun 26, 2013

    The dollar slipped some after the soft Q1 U.S. GDP revision, though overall retained its poise through the session. EUR-USD weakness was a highlight, as that pairing traded to lows of 1.2985, after peaking over 1.3050. Recent ECB dovish commentary should continue to weigh on the euro. USD-JPY fell back to 97.25 on softer Treasury yields, before picking back to 97.75 in the aftermath of a not-stellar 5-year auction, which saw yields bump back up. Elsewhere, Cable followed the euro lower, while USD-CHF moved over 0.9440, on better risk appetite. Perversely, the weak U.S. data allayed Fed tapering fears, which resulted in a decent Wall Street rally.

    [EUR, USD]
    EUR-USD popped to 1.3055 highs from 1.3020 after the weaker U.S. GDP data, though sellers returned quickly. The pairing later edged out lows of 1.3007, but corporate backed bids and commercial flows kept the downside intact for a while. The euro eventually gave up the 1.3000 handle, trading to lows of 1.2985. This was the first time under 1.3000 since June 3, where a low of 1.2955 was printed, and will likely provide interim support. Dovish commentary from ECB officials should continue to weigh however, and the market may well eye 2013 lows around 1.2745 in the coming days.

    [USD, JPY]
    USD-JPY fell back from 97.90 to 97.35 following the softer U.S. GDP print, and subsequently lower Treasury yields. The pairing steadied through mid-morning, before testing bids into 97.30-40. Failure to hold the 98.00 handle this week shifted focus to the downside, though dollar demand may be enough to keep the 96 handle out of reach for now. USD-JPY bumped around inside a 97.25-45 before regaining 97.75 after a weak Treasury auction saw yields climb back up.

    [GBP, USD]
    Cable rallied to just shy of 1.5400 from 1.5380 after U.S. data, where sellers were waiting in the wings. As EUR-USD faded, sterling followed suit, taking GBP-USD to lows of 1.5315, and filling in 1.5350-40 bids in the process. A modestly firmer EUR-GBP added some weight to cable, which stayed near session lows into the close.

    [USD, CHF]
    USD-CHF headed to 0.9380 following the disappointing GDP revision. The market got caught a bit long over 0.9400. Late on in the European morning a move up through the 100-dma drew in fund names and carried the pair to 0.9425. However, it is still in reasonable shape from a technical perspective. Perversely, the U.S. data should allay Fed tapering fears and could keep risk appetite elevated. In fact, USD-CHF later rallied over 0.9440.

    [USD, CAD]
    USD-CAD again found support into 1.0460 in London trade, where standing bids have been noted since Monday. The firmer USD tone took the pairing to test 1.0500, though interim option backed selling interest capped upside. Another layer of offers at 1.0530 and 1.0550 should keep gains contained. The pairing settled in around 1.0470-80 through most of the remainder of the session, perhaps as trend lows in gold, and weaker oil prices were offset by firmer equities.

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