Home > XE Currency Blog > XE Market Analysis: Asia - Jun 30, 2014

AD

Error message

Notice: unserialize(): Error at offset 40 of 40 bytes in variable_initialize() (line 1204 of /var/www/community/webroot/community/includes/bootstrap.inc).

XE Currency Blog

Topics7698 Posts7743
By XE Market Analysis June 30, 2014 5:22 pm
    XE Market Analysis's picture
    XE Market Analysis Posts: 5622
    XE Market Analysis: Asia - Jun 30, 2014

    The dollar traded mixed in quite month- and quarter-end conditions and with the approaching July 4 holiday. USD was mostly lower versus the euro, which generally outperformed. But it was firmer against the correcting dollar bloc currencies, and near net unchanged versus the JPY after the Japanese currency gave back Tokyo-session gains. There wasn't much impact from a thin and mixed U.S. calendar that showed a smaller than forecast decline in the Chicago ISM but a bigger than expected drop in pending home sales. EUR-USD rose to a new high at 1.3698, extending overnight gains, following the preliminary June Eurozone inflation figures, even though the flash estimate of HICP came didn't produce the expected tick higher to 0.6% y/y. Instead, it remained unchanged in June at 0.5% y/y. M3 money supply did, however, unexpectedly accelerate to 1.0% y/y from 0.8% y/y in May, so there was something for the bulls. USD-JPY clocked a six-week low at 101.23 before rebounding toward 102.50. Firmer Japanese and Asian stocks, and sub-forecast Japanese industrial production data, were overlooked as the market focused on USD-JPY's closure on Friday below the 200-day moving average for the first time in the 'Abenomics' era.

    [EUR, USD]
    EUR-USD extended to a new high at 1.3698 following the Eurozone inflation figures, even though the flash estimate of HICP came didn't produce the expected tick higher to 0.6%, instead remaining unchanged in June at 0.5% y/y. M3 money supply did, however, unexpectedly accelerate to 1.0% y/y from 0.8% y/y in May, so there was something for the bulls. There still seems to be a overall bearish view in market talk. The 10-year T-note over Bund yield spread has also pushed back to the 128 bp from sub-127 bp earlier, though we would probably need to see a move beyond 130 bp and into fresh long-term high territory to generate much excitement. Key EUR-USD resistance is marked at 1.3674-77, which encompass the 200-day moving average and the Jun-6 peak.

    [USD, JPY]
    USD-JPY remains heavy with recovery from the earlier six-week low at 101.23 stalling in the 101.40-45 area. Option expiries of vanilla structures with strikes at 101.50 are reportedly coming off this week. USD-JPY has traded lower today despite firmer Japanese and Asian stocks, and sub-forecast Japanese industrial production, which came in at +0.5% m/m in the preliminary estimate, disappointing the median for +0.9%. USD-JPY closed on Friday below the 200-day moving average for the first time in the 'Abenomics' era, which, along with yield differentials, has maintained a bearish tone.

    [GBP, USD]
    We remain sterling bullish with the BoE having left the hawkish starting gates ahead of the Fed and ECB. BoE's Bean said over the weekend that market expectations of a rise in interest rates at the turn of the year are "reasonable." Last week's major-trend peak at 1.7063 was easily taken out on Monday, wuth cable touching 1.7114 highs, while a big-picture Fibonacci retracement level at 1.7330, which is a 50% retracement level of the 2007 to 2009 decline, offers a longer-term target. Our EUR-GBP target is provided by the major trend lows of July 2012 at 0.7755.

    [USD, CHF]
    EUR-CHF settled in the 1.2140s after logging a fresh trend low at 1.2150 on Friday amid concern about the situations in Iraq and Ukraine, which has been underpinning the Swiss currency's safe-haven premium. Technically, the break of a former uptrend channel support line at 1.2190 opened the way to the mid-1.21s. The cycle low of 1.2104 and 1.2100 are key support levels, but so far have remain unchallenged.

    [USD, CAD]
    USD-CAD extended to new rebound highs following the Canadian GDP miss, reaching a peak of 1.0696 so far, though good selling was seen into 1.0700, putting a cap on the pair. The 1.0700 level and 1.0716-18, which mark last week's consolidation lows before the break lower on Thursday, mark key near-term resistance. The CAD, like the other dollar bloc currencies, had already been in correction mode ahead of the Canadian data, following a period of outperformance.

    Paste link in email or IM