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By XE Market Analysis March 6, 2014 4:48 pm
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    XE Market Analysis: Asia - Mar 06, 2014

    The dollar and yen were lower in N.Y. trade on Thursday, with the euro rallying sharply following the ECB policy announcement and press conference. The Bank upped its growth forecast, tamping down further easing prospects in the process and taking EUR-USD over 1.3870. Given the re-escalation of tensions with Russia on the latest threats of coordinated sanctions by the U.S. and Europe, this move on the euro thanks to steady ECB policy could get stretched ahead of the Feb U.S. payrolls report tomorrow. USD-JPY meanwhile, traded to 103.16 highs, rallying from 102.70 after the lower U.S. jobless claims, and firmer Treasury yields. Other U.S. data was a bit disappointing, as Q4 productivity was revised lower, and factory orders missed consensus to the downside. FX trade will likely slow some into the Jobs report on Friday, though markets will eye the Ukraine.

    [EUR, USD]
    EUR-USD spiked up, down and ended up virtually unchanged after the ECB left policy unchanged. The pairing touched 1.3775 highs, 1.3725 lows, and settled near 1.3755, right where it was into the announcement. The pairing ramped up through 1.3800 during the press conference, and kept gaining altitude all the way to 1.3873. The euro maintained altitude near session highs through the afternoon after the ECB upped its growth forecast, tamping down further easing prospects in the process. The December 27 trend high of 1.3893 will be the next upside target level, though there has been talk of option barriers at 1.3900, which will likely be defended in the near term.

    [USD, JPY]
    USD-JPY opened near 102.60, and made its way to 103.16 highs after the U.S. jobless claims data. Wall Street and yields were higher, with risk appetite holding up despite the potential for further geopolitical worries from the Ukraine. Talk of U.S. and European sanctions against Russia could rile the crisis up again. USD-JPY rallied to its best levels since January 39, and should the U.S. employment report on Friday beat expectations, may be in a position to test that date's 103.44 high.

    [GBP, USD]
    The BoE left monetary policy unchanged and didn't issue a statement, as had been widely anticipated. This leaves the repo rate at 0.5% and the QE total at GBP 375 bln. We'll have to wait until the Monetary Policy Committee minutes are released on Mar-19 for insight on the vote breakdown and thinking. Cable popped briefly to 1.6750, though quickly headed to 1.6685 lows after the U.S. claims data. As the dollar faltered broadly however, sterling surged back to 1.6778 highs.

    [USD, CHF]
    EUR-CHF made a new rebound high of 1.2215 in N.Y. The new high reflected the ECB's lack of easing measure from their announcement on Thursday, and to a lesser degree, a continued unwind of risk-off positioning as markets adjust to the abatement in geo-political tensions over the Ukraine crisis. USD-CHF meanwhile, stumbled briefly under 0.8800 on general USD weakness.

    [USD, CAD]
    USD-CAD dipped under the 1.1000 mark for the first time since February 19, basing initially at 1.0993. The sell-off started on Wednesday, following the BoC standing pat on its easing bias, and continued this morning, with better U.S. claims data, and a firmer risk backdrop. Corporate bidding interest was a factor under the figure, which slowed losses. Later though, USD-CAD broke diwn again after the better Ivey PMI outcome, diving to 1.0955 from near 1.0990. Stops were a factor under 1.0980, and from here, the February 19 low of 1.0910 will attract.

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