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By XE Market Analysis May 29, 2014 2:47 pm
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    XE Market Analysis: Asia - May 29, 2014

    The dollar was mostly easier in N.Y. trade on Thursday, as Treasury yields fell further into month-end, and as U.S. Q1 GDP was revised sharply into negative territory. On the positive side, jobless claims were lower than expected. EUR-USD found some resistance over 1.3620 following its brief foray under 1.3600, as USD-JPY saw buyers return into 101.40. U.S. yield erosion weighed on the buck to a degree, though the euro may be priced in now for an ECB move next week, as the yen could rebound some more on expectations for a steady BoJ. FX trade could remain quiet overnight, as month-end and the weekend are at hand, and looking to next week, more calm could be in store ahead of the ECB meeting and the U.S. May jobs report.

    [EUR, USD]
    EUR-USD's post-data bounce was shallow and short-lived, with the pairing slipping briefly under 1.3600 from a 1.3625 high. Wall Street's firmer open helped the risk backdrop, though the greenback's bounce was brief. The dip in U.S. yields supported the euro, though sellers returned again over 1.3625. Euro bids are seen into 1.3570 now, though stops are reported underneath there. Barrier options at 1.3550 may be protected, however.

    [USD, JPY]
    USD-JPY dipped to 101.50 from 101.65 after the GDP miss, recovered back to 101.77, then slipped to intra day lows of 101.42, where buyers returned. Thursday was the first day this week the pairing wasn't able to clear the 102.0 mark, and offers noted over that level earlier in the week, are now said to be residing from 101.80. Lower daily highs and lower daily lows point to further losses, and we expect a test of sub-101 levels over the next few session.

    [GBP, USD]
    Sterling steadied today after BoE MPC member Weale said that gradual interest rates rises would have to start sooner rather than later if a sudden, sharp rise in rates were to be avoided. By "sooner" it was clear he didn't mean by year-end, and prevailing market expectations for the first hike March 2015 remain intact.

    [USD, CHF]
    EUR-CHF has largely steadied over 1.2200. The Swiss franc has been slowly weakening over the last several weeks, reflective of a eroding safe-haven premium as markets take a more sanguine view of the Ukraine situation. This said, recent fighting in the region could change this backdrop quickly, resulting in a firmer CHF.

    [USD, CAD]
    USD-CAD bottomed out at 1.0826, after opening near 1.0865, with support noted at 1.0820-15 (May 8-9 lows). Corporate bids are said to be parked at 1.0820, with more from 1.0800. Only a clean break of 1.0800 will shift sentiment, though with buyers in place, and the ahead of key Canadian data, and month-end on Friday, we look for the May range to hold up for now.

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