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By XE Market Analysis May 30, 2014 5:19 pm
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    XE Market Analysis: Asia - May 30, 2014

    Month-end and a Friday combined to keep FX trade very light on Friday. Profit taking helped lift EUR-USD from near 1.3600 through buy stops over 1.3640. The pairing eventually peaked at 1.3650. USD-JPY was steady between 101.65 and 101.85, while USD-CAD perked up on Canada's GDP miss. U.S. data was mixed, with Chicago ISM beating expectations, Michigan sentiment a bit softer, and personal income data in-line with forecasts. Wall Street managed modest gains, while Treasury yields eased after perking up in morning trade. Looking to next week, more relative calm calm could be in store early in the week, ahead of the ECB meeting and the U.S. May jobs report.

    [EUR, USD]
    EUR-USD moved to intra day highs of 1.3638 after the U.S. data, with pre-weekend short covering lifting the pairing. The market is still quite likely short of euros, with that trade driven by expectations for ECB easing next week. The euro's downside however, has been quite sticky, with forays under 1.3600 brief and limited. As a result, it appeared positions were reduced on Friday. EUR-USD later ran through 1.3640 stops, on its way to 1.3650 intra day highs. Pre month-end London short covering was reported, though follow through was limited. Standing offers were seen building from 1.3660.

    [USD, JPY]
    USD-JPY firmed up marginally through the session, though was unable to climb toward 102. The pairing opened near 101.50, and posted session highs of 101.85 on the back of improved U.S. data. Some pre-month end short covering was the likely driver, though we look for further downside risk next week.

    [GBP, USD]
    Sterling ran up over 1.6775 in N.Y., but has more generally found its feet after tumbling earlier in the week following some data misses. Helping underpin were BoE MPC member Weale's remarks of Wednesday, that gradual interest rates rises would have to start sooner rather than later if a sudden, sharp rise in rates were to be avoided. We think in the bigger picture Cable is entering a period of broad stability.

    [USD, CHF]
    EUR-CHF traded briefly under 1.2200 on Friday, though month-end considerations were the likely driver, as positions were adjusted. The Swiss franc has been quite steady over the past week, reflective of a eroding safe-haven premium as perhaps diplomacy in the Ukraine will prevail. This said, recent fighting in the region could change this backdrop quickly, resulting in a firmer CHF.

    [USD, CAD]
    USD-CAD blipped higher after the Canada GDP miss, and softer prices data, moving from 1.0840 to 1.0875 before settling in a quiet 1.0840-70 band. The pairing had moved sideways between 1.0820 and 1.0840 overnight in listless trade, with month-end keeping things quiet. Offers are in place from 1.0880, with bids down at 1.0820.

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