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By XE Market Analysis May 6, 2015 2:38 pm
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    XE Market Analysis: Asia - May 06, 2015

    The dollar took another hit in N.Y. trade on Wednesday, where following the blowout trade deficit released on Tuesday, the April ADP employment survey missed the mark as well. Treasury yields moved higher still, though did not help the greenback. Wall Street tumbled, as Fed chair Yellen said equity market valuations were "quite high", which didn't do any favors to the dollar either. EUR-USD rallied to better than two-month highs of 1.1367, after opening near 1.1215, as USD-JPY fell to lows of 119.21, from highs of 119.85. USD-CAD slid to 3.5 month lows of 1.1941, as oil prices topped $62.50, as sterling underperformed. Cable moved over 1.5275 from lows near 1.5200, though EUR-GBP ramped up to three-month highs ahead of the U.K. election.

    [EUR, USD]
    The dollar took a tumble after the soft ADP employment print, taking EUR-USD to 1.1285 highs from 1.1225 early in the session. The pairing later traded the 1.13 handle for the first time since February 26, peaking at 1.1367. Technically, the break of the 100-day moving average at 1.1257 provided some buying impetus, along with softer U.S. jobs data, with the next upside target seen at 1.1379 (Feb 26 high). Option buying was noted from 1.1300, along with leveraged fund buying, likely stop loss in nature.

    [USD, JPY]
    USD-JPY dipped under its 100-day moving average, currently at 119.36, to touch 119.22 lows. The pairing rebounded back over 119.40, and will need to close the N.Y. session above the 100-dma to keep dollar sentiment positive. Big picture, it will take a decisive break under 118.50 or a move above 120.85 to shake the market out of range trade mentality.

    [GBP, USD]
    Sterling is mixed today, settling after a period of underperformance ahead of tomorrow's UK election. Cable is trading in five-day high territory in the mid-1.52s after rebounding from the sub-1.51 levels that were seen yesterday. The pound is also up against the yen, but lower versus the euro and dollar bloc currencies. Gilts have also found a footing after coming under heavy pressure over the last week. We think this is a calm before a storm. Pre-election polls have been remarkably consistent, putting the right-leaning Conservative Party in the lead, but with support well short of an outright majority, leaving a good possibility that a left-leaning Labour-SNP (Scottish National Party) coalition government will form.Cable moved over 1.5275 from lows near 1.5200, though EUR-GBP ramped up to three-month highs ahead of the U.K. election.

    [USD, CHF]
    EUR-CHF has ebbed back under 1.0400 after making a one-month high at 1.0508 last week, as there remains little sings of breakthrough in Greek negotiations with its creditors. The SNB is amid an ongoing fight to curtail EUR-CHF's downside. The central bank last month expanded the number of groups subject to negative rates on deposits at the central bank in a fresh effort to curtail demand for the franc. The SNB said at its March policy review that the franc is "significantly overvalued," and would "remain active in the foreign exchange market, as necessary." SNB Chairman Jordan said more recently that "we will remain active in the foreign exchange market as necessary in order to influence monetary conditions."

    [USD, CAD]
    USD-CAD gave up the 1.20 handle, trading to 1.1985 lows early on, as oil prices remained near their five-month high near $62/bbl, and as the greenback overall stayed under pressure following soft ADP jobs data. The 150-day moving average comes in at 1.1978, which provided initial support, though under the level, the market gunned for the April 29 low of 1.1945. The pairing stayed heavy following the much better Ivey PMI outcome, trading briefly below the April 29 and January 20 low, to new near four-month lows of 1.1940. Crude oil posted fresh highs of $62.55 following the first EIA reported inventory draw in 17 weeks, though as oil eased back into $6050, USD-CAD rallied back to 1.2045.

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