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By XE Market Analysis November 1, 2013 3:22 pm
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    XE Market Analysis: Asia - Nov 01, 2013

    The dollar firmed further through the N.Y. session on Friday, aided by the combination of ECB easing talk, and renewed Fed taper talk. In addition, better than expected manufacturing PMI's helped USD sentiment, and allowed EUR-USD to trade to near 1.3480. The September 25 low of 1.3451 will be key next week. Firmer Treasury yields helped USD-JPY touch 98.85, after opening near 98.30. USD-CAD moved up over 1.0450 after holding the 1.0400 level, while cable slipped under 1.5930 after tripping stops under 1.6000.

    [EUR, USD]
    EUR-USD chipped away at bids into 1.3500. Data from Reuters suggested bids in excess of EUR 700 mln and there were reportedly much larger stops below that are running tight to that level. Under 1.3500 there is the 50-dma to contend with at 1.3487, which will draw in further selling if it gives way. Several bank research desks have called for an ECB cut in either November or December after revising the outlook after yesterday's EZ CPI, which raises the importance of next week's ECB meeting. It will run ahead of the next U.S. NFP release and will keep EUR-USD heavy in the near-term. Fitch rewarded Spain with an upgrade to stable from negative on their outlook. Guess that's what they get for their 0.1% GDP growth this week that brought them technically out of recession. This may have given the euro a brief wiggle higher. EUR-USD found a base at 1.3480, though was just over the 50-day dma into the close.

    [USD, JPY]
    USD-JPY consolidated gains, leaving it just off ntra-day highs at 98.85. Movement from current levels is likely to slow due to relatively fresh range binary positions that are live from 99.00. The majority of the double-no-touch positions that were written have still got several more weeks to run until they mature later this month. The positions also include 99.50 and 100.00 barriers, which are previous congestion zones from mid-September. This could encourage profit taking into the N.Y. close by day traders that are reluctant to run long positions.

    [GBP, USD]
    Cable cleared away near-term support as U.S. account selling triggered stops through 1.5970. One standout seller was noted with an interest from 1.5990 after Cable gave up the 1.6000 level on U.K. sell-interest. The stop hunt enabled EUR-GBP to climb out of 0.8450 to briefly trade back over 0.8470, though it remains vulnerable with EUR-USD under1.3500 again. The Cable move lower reinforces the daily technical picture, which has projected a move back to 1.5985-00, where Cable initially took off from on October-16. There were also reports that Barclays has suspended several currency traders, including chief dealer Ashton, as part of a probe into rigged fixing rates.

    [USD, CHF]
    CHF had a choppy start to the session amid USD and EUR flows. An early push out of stale EUR longs forced EUR-CHF down to 1.2300, but this was offset by a stop hunt in USD-CHF, which took the dollar pairing from 0.9070 up to 0.9115 and EUR-CHF briefly traded back at 1.2325. The CHF may seen buying interest on dips against the EUR in the very near-term as risk assets struggle with the market rethink on Fed taper. USD-CHF looks poised for further gains after it marked the fifth consecutive session of higher highs and 0.9150 resistance is the next target. There was no impact from Swiss manufacturing PMI, which pulled back to 54.2 from 55.3 previously, though still in expansionary territory.

    [USD, CAD]
    USD-CAD reverted back to session highs over 1.0440, after hanging around the 1.0410 mark early on. There was talk that CAD demand was quite heavy, related to Barrick Gold's equity offering, though with this interest reportedly filled in, USD-CAD caught up some to the USD's higher levels seen elsewhere. The 1.0500 barrier options that came within a hair of being snuffed out on Wednesday, expired at 10:00 EDT. The level appeared to have been defended back then, and it seemed the option writers bought back their spot USD-CAD positions following expiry. The pairing climbed from just over 1.0410 to over 1.0450.

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