Home > XE Currency Blog > XE Market Analysis: Asia - May 27, 2015

AD

XE Currency Blog

Topics7223 Posts7268
By XE Market Analysis May 27, 2015 3:11 pm
    XE Market Analysis's picture
    XE Market Analysis Posts: 5147
    XE Market Analysis: Asia - May 27, 2015

    The dollar rallied in morning U.S. trade on Wednesday, and while there was no U.S. data to drive the market, a rebound on Wall Street helped sentiment to a degree. taking EUR-USD to trend lows of 1.0820, as Greece concerns remained front and center. USD-JPY meanwhile rallied to near eight-year highs, cracking the 124 mark, and coming within a few points of levels last seen in June of 2002. USD-CAD rallied ahead of the BoC announcement, stopping just short of 1.2500. Weaker oil prices weighed on the CAD through the session, though the BoC didn't offer up any surprises. Cable fell from near 1.5400 into the open, though spent the morning easing into 1.53, where support materialized.

    [EUR, USD]
    EUR-USD took out 1.0860 support, on its way to 1.0820 lows. Option backed bids were reportedly parked at 1.0800, with sell-stops seen underneath. The uncertainty in Greece saw Bund yields fall this morning, which was dollar supportive, while overall Greek uncertainty has left the euro vulnerable to further losses in the near term. Later though, EUR-USD ramped up to 1.0910 highs, with stops reportedly kicking in on the move over 1.0880. Talk of a "staff level agreement" on Greece reforms was the driver, though with this information coming from Greek officials, it remains to be seen how much progress has in fact been made. Indeed, EUR-USD quickly returned to 1.0860 before steadying under the figure.

    [USD, JPY]
    USD-JPY topped out at 123.87 into the London close, after briefly pulling back from the July, 2007 high of 123.66, seen ahead of the N.Y. open. The June, 2007 high of 124.14 remains the next target, though will have to get through reported offers into the 124 mark first. One needs to go back nearly 13 years, to June, 2002 to find a higher USD-JPY level, a year that printed a 134.80 pinnacle. The pairing later traded to 124.07 highs before easing back into 123.80, coming up just short of the 2007 peak. Stops were reported over the figure, though price action through the figure may have been indicative of 124 barrier options being gunned for, followed by a hasty sell-off when accomplished. Despite recent Japan policymaker talk of no more stimulus, the ultra loose monetary policies of Abenomics are still likely to be in force when the Fed eventually does reach rate hike lift-off, perhaps as early as September, and as a result, USD-JPY may well make 13 year highs sooner than later.

    [GBP, USD]
    Sterling traded on a softer footing, seeing cable ease into 1.5302, its lowest since May 7, from pre-N.Y. highs over 1.5420. The dollar's broad gains helped the pairing lower, though the pound lost ground to the euro as well, seeing the cross move back over 0.7100. U.K. house price data on Thursday, and revised U.K. GDP on Friday will take the stage looking ahead.

    [USD, CHF]
    EUR-CHF dipped back under 1.0360 amid another round of euro underperformance. The recent foray above 1.05 stalled shy of the late-April high at 1.0508. SNB's Zurbrugg said last week that negative rates in force for as long as policy requires. This is the new boilerplate rhetoric of Swiss policymakers, who have been in a fight to curtail EUR-CHF's downside, though their options will be limited in context of any broad euro underperformance.

    [USD, CAD]
    USD-CAD posted better than one-month highs of 1.2484 into the BoC announcement, with some defensive CAD selling noted into what some thought might have been a more dovish BoC stance. May lows in WTI crude, which was trading under $57.70, supported USD-CAD as well, while U.S./Canada yield spreads widened in favor of the greenback. The pairing rattled around between 1.2424 and 1.2470 following the BoC announcement, briefly touching North American session lows, before rebounding. There was little in the statement to knock the CAD out of its intra day range, though on C$ strength, the bank said the "net effect will need to be assessed" should trends continue. Though as oil prices have moved from 2015 highs, USD-CAD has rallied better than 4% so far this month.

    Paste link in email or IM