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By XE Market Analysis May 15, 2014 2:03 pm
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    XE Market Analysis: Asia - May 15, 2014

    The dollar was mostly lower in N.Y. trade on Tuesday, as risk-off trade dominated. A 7-year low in jobless claims, better Philly Fed and N.Y. Fed indices outcomes were offset by a miss in industrial production, hotter core CPI and a weaker NAHB housing market index. When coupled with weaker EU inflation and growth data released during the London morning session, stocks tanked, Treasury yields pulled back, and the dollar stumbled. EUR-USD posted trend lows of 1.3649 into the early data, though moved steadily higher to peak at 1.3732 into the London close. USD-JPY was sold off to 101.30 lows, coming dangerously close to March lows of 101.20. Cable moved over 1.6800, while USD-CAD was supported by the softer U.S. production data, and general lack of risk taking.

    [EUR, USD]
    EUR-USD dipped to 1.3649 trend lows immediately following the U.S. claims and CPI data, though as the risk backdrop deteriorated, the euro made up some ground. The pairing made its way back over 1.3730, just above the 1.3725 peak posted during Asian hours. Good selling interest is not seen until the 1.3740 region, where we suspect some shorts will be re-loaded. Given the backdrop of a dovish ECB, and softer EU inflation and growth data, the pairing remains in sell-the-rally mode.

    [USD, JPY]
    USD-JPY moved briefly over 102.00 following the early round of U.S. data, though was quickly pushed lower from there. The pairing later approached tricky levels, though ultimately found a floor at 101.31. The March base of 101.20 has come into focus now, with a break there expected to result in a test of 100.75 (February 4 low). The risk sensitive yen managed to recover over 101.50 into the close, but more risk-off conditions will continue to support the JPY.

    [GBP, USD]
    After dipping to 1.6743 after the U.S. CPI data, cable rallied back over 1.6800, as the dollar in general was sold off. Risk levels were poor, which tended to help sterling versus the dollar. The pound however, did underperform versus the euro, as EUR-GBP rallied over 0.8175.

    [USD, CHF]
    EUR-CHF has re-established a sideways direction anchored around 1.2200, having recovered from a recent foray to the mid-121s. The cycle low of 1.2104 and 1.2100 are key support levels. The threat of SNB intervention into its 1.2000 limit peg is helping to deter franc buying to some extent.

    [USD, CAD]
    FX Action: USD-CAD was quiet again through the North American session, posting a narrow 1.0865 to 1.0891 trading band. The pairing opened at session lows, and crept up through the day on the back of softer U.S. production data, and general risk-off conditions. Bids are parked at 1.0850 (corporates) with offers seen from 1.0910.

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