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By XE Market Analysis March 4, 2014 3:16 pm
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    XE Market Analysis: Asia - Mar 04, 2014

    The dollar firmed up in N.Y. trade, after showing signs of weakness early in the session. Russia's apparent pull back from the brink saw U.S. equities more than recover Monday's steep losses, taking the S&P 500 to fresh record highs. This seemed to help the dollar some, though EUR-USD softness was a leading factor as well. Talk of an imminent ECB rate cut via a "think tank" report did the the rounds in FX circles, suggesting that even with a modest recent uptick in inflation, this isn't enough to deter the ECB mulling a trim of the refi and depo rates. EUR-USD fell to 1.3726 lows, down from a session peak over 1.3780. USD-JPY reclaimed the 102.00 handle, peaking over 102.25. Late in the session, Russia reportedly test fired an ICBM, perhaps in response to SecState Kerry's speech warning Russia. Stocks stumbled briefly, though has little lasting impact.

    [EUR, USD]
    EUR-USD tested 1.3680 early in the session, reversing losses seen on Monday on dollar safe-haven buying. With risk appetite ramped up though, and a "think-tank" report saying the ECB could still cut rates, despite the uptick in inflation data, the pairing turned lower. Stops should feature under 1.3720, just under the overnight low, with the pairing eventually basing under 1.3730. A move under there could bring last Friday's 1.3695 lows into view.

    [USD, JPY]
    USD-JPY was steady near intra day highs, trading at 101.90 in early N.Y. The pairing touched 101.95 in early London before steadying, as 102.00 standing offers influenced. Stops were later a factor from 102.10, taking the pair to 102.27 highs. The 102.50 area should provide initial resistance.

    [GBP, USD]
    Sterling has traded lower, reversing an earlier bid as the markets used the weaker than expected construction PMI as an excuse to take the currency lower. We say excuse as the construction report was weather affected and, at 62.7, still signals very robust expansion in the sector. GBP-USD, made it up over 1.6715 before easing again. As the dollar firmed in N.Y. dealings, cable made its way briefly back down toward 1.6650.

    [USD, CHF]
    EUR-CHF flipped higher as the usual correlation to swings in rise appetite unfolded following news that Russia ordered its troops engaged in military exercises back to base. The cross rose back above 1.2185, putting in some distance from the fresh cycle low of 1.2104 that was seen on Monday, which is the lowest level seen since June last year.

    [USD, CAD]
    USD-CAD struggled over 1.1100 overnight, with a solid band of offers reportedly in place at 1.1120. The pairing eased back to 1.1063 lows in early North American dealings, mostly the result of improved risk taking due to the apparent easing of tensions in the Ukraine. USD-CAD bids were noted from 1.1060, though the greenback's generally bid tone limited downside from there. The pairing made it back to 1.1117 in afternoon trade, just under earlier noted offers.

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