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By XE Market Analysis May 7, 2015 2:39 pm
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    XE Market Analysis: Asia - May 07, 2015

    The dollar clawed back some recent losses in N.Y. on Thursday, as much better jobless claims data helped sentiment. The major driver however, was likely a round of dollar short covering ahead of Friday's key jobs report. Given the greenback's steep losses suffered over the past couple of session, some position paring dame as not much of a surprise. EUR-USD traded down into 1,1238 lows, after opening near 1.1325, as USD-JPY rallied over 119.80, after finding support into 119.00. USD-CAD moved up over 1.2150 as oil prices slipped 6% from Wednesday's 2015 highs, as traded a narrow range on either side of 1.5200, as markets awaited the outcome of Thursday's U.K. general election.

    [EUR, USD]
    EUR-USD found a base at 1.1238, after opening the session near 1.1325. The better jobless claims data, and Wall Street rally both helped the greenback, while some nervousness ahead of Monday's Eurogroup meeting on Greece likely soured euro sentiment to a degree. Friday's U.S. jobs report has prompted some paring of long EUR-USD positions, following the sharp gains seen over the past two sessions.

    [USD, JPY]
    USD-JPY managed to hold the 119.00 handle into the open, and has since rallied nicely to 119.84 highs. Dollar short covering ahead of Friday's U.S. employment report has been a feature through the session, though gains are likely to be limited overnight, with the dreaded 120 handle, which has largely defined the top for the past month, looming. The 50-day moving average stands at 119.92, and should provide resistance into tomorrow's jobs data.

    [GBP, USD]
    Sterling was lower today against both the dollar and euro as UK election day dawns. 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. The SNP wants this, and while Labour has not so far made any hint of commitment, it will presumably not want too see a minority Conservative government take up the reigns. There are a lot of uncertainties, but one thing is for sure is that this will be a ground breaking election, and the weeks ahead look set to be politically chaotic by UK standards. We expect sterling will be affected by this, and anticipate Cable will see sub-1.5000 levels again before long.

    [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 continued to climb, moving to 1.2163 highs, helped by the broader greenback rally, and the pullback in oil prices, which saw WTI crude slip to $58.50 lows, from overnight highs of $61.29. In addition, the CAD may be feeling some pain from the NDP election victory in Canada's oil patch of Alberta, which has raised concerns the new government may raise royalties on oil producers, and pare back support for projects such as the Keystone XL project, which could be a drag on new energy investments. USD-CAD resistance comes in now at 1.2180, representing Monday's high.

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