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By XE Market Analysis May 19, 2014 1:37 pm
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    XE Market Analysis: Asia - May 19, 2014

    FX trade was very sluggish in N.Y. on Monday, as a lack of data coupled with steady yields, and marginally higher equities to keep the dollar inside a narrow band. EUR-USD managed a 1.3703 to 1.3734 range, though spent most of its time inside of 1.3715-25. USD-JPY meanwhile, found support into 101.10, and perked up over 101.30 on the back of better stocks, and hopes for diplomacy in the Ukraine crisis. Cable settled lower into BoE minutes later this week, while USD-CAD was quiet due to Victoria Day holiday in Canada.

    [EUR, USD]
    EUR-USD dipped briefly to 1.3703, just above the low seen in Asia overnight. Talk of Asian reserve manager bidding interest into 1.3700 was again heard, and put an effective floor under the pairing. EUR-USD later ran up to 1.3734 highs, though glided back down to mid-range in the N.Y. afternoon, near 1.3715 in quiet dealings. Continental names were reportedly sellers over 1.3730, perhaps helped my comments from the ECB's Mersch, who earlier said the chances of ECB action in June has risen considerably. Into the close though, 1.3710-30 should contain.

    [USD, JPY]
    USD-JPY remained heavy in early N.Y. trade, undulating between 101.10 lows and 101.25. Bids were in place from 101.10 to 101.00, with stops expected just underneath. The February 4 low of 100.75 will be in the initial target on a move under the figure, and large sell-stops are reported at 100.70. USD-JPY's upside has been kept in check since mid-April, when it became apparent the BoJ was not going to inject further stimulus. A move under 101 could be the catalyst to squeeze out some more strategic long positions, though later, USD-JPY bounced to N.Y. session highs over 101.30. The rebound on Wall Street helped dollar-yen sentiment slightly, but the pairing will need to reclaim the 102 handle to really put a squeeze on shorts.

    [GBP, USD]
    Sterling has perked up with Cable rising to the loftiest level since last Wednesday at 1.6845 and EUR-GBP dipping under 0.8150, within half a dozen pips of Friday's low. The potential takeover of AstraZeneca by Pfizer remains in the headlines, with the latest being the former's rejection of the latter's GBP 70bn offer, which apparently caused Cable to dip earlier, before the current rebound. Aside from this focal point, which remains in the realms of possibility, the sterling market is squaring up to the key U.K. data releases and the BoE minutes to the May MPC meeting that are due over the coming days, which we think should be net supportive for sterling.

    [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]
    USD-CAD traded quietly, largely due to Canada being out on holiday today. A lot of liquidity was missing from the market as a result, with the pairing managing just a 1.0853-75 band through the N.Y. session. Bids were seen into 1.0850, with standing offers noted from 1.0900.

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