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By XE Market Analysis November 14, 2014 2:57 pm
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    XE Market Analysis: Asia - Nov 14, 2014

    The dollar traded broadly lower in N.Y. on Friday. Retail sales and Michigan sentiment data were better than forecasts, though following modest dollar rallies after the releases, the greenback succumbed to what was likely pre-weekend profit taking. EUR-USD found support into 1.2400, before ramping up to 1.2544 highs, tripping stops at 1.2500 in the process. USD-JPY, which posted trend highs over 116.80, eventually tested the 116.00 region before finding a footing. Cable meanwhile, traded under 1.5600 early on, before shooting back to just shy of 1.5700. USD-CAD meanwhile, was weighed by better Canadian manufacturing data, and a decent rebound in oil prices.

    [EUR, USD]
    EUR-USD moved back to the top of its intra day range by mid-morning, trading over 1.2465, after failing to take out the 1.2400 level following the retail sales or sentiment releases. The lack of downside follow through saw traders cover some shorts into the weekend, with the move over 1.2430 seeing stronger buying emerge. The pairing later found initial resistance into 1.2500, though when the level broke, a flood of buyers stepped in, taking the euro to better than one-week, 1.2544 highs. Thin post-London conditions apparently resulted in quite a bit of movement on not very much volume. The euro outperformed overall, as EUR-GBP and EUR-JPY moved higher as well.

    [USD, JPY]
    USD-JPY moved to trend highs over 116.80 following the better U.S. retail sales data, though another band of sellers into 117.00 stopped the rally cold. As the dollar turned lower more broadly, and as Wall Street faded into the red, USD-JPY traded steadily lower, eventually finding its footing into 116.05. The rally seen since the BoJ's surprise moves last meeting appears to be getting a bit tired, and a move back under 114.00 is certainly within the realm of possibility.

    [GBP, USD]
    Sterling drifted to fresh lows in London, with Cable making a new 13-month low at 1.5654 and EUR-GBP reaching new three-week highs above 0.7900. This extends the decline that was set in motion by the release of the November BoE Quarterly Inflation Report on Wednesday, which trimmed both GDP and inflation forecasts and noted that CPI is likely to fall below 1% over the next six months. The pound suffered further for a while in N.Y. as cable traded to 1.5593 lows, before ramping up to 1.5694, on the back of a broadly weaker dollar.

    [USD, CHF]
    EUR-CHF clocked a fresh 26-month low at 1.2012 on Friday -- the thirteenth consecutive day the franc has edged out a fresh high against the euro. The threat of SNB intervention is high given the nearing proximity of the franc's cap at 1.2000. The SNB's resolve in any defence can be expected to be resolute. President Jordan said in a press interview this week that the cap will remain in place for the "foreseeable" future as it is "essential" for preventing deflation. Jordan also said last month that negative interest rates could be deployed as an extra defence if need be. The franc hasn't seen the south side of 1.2000 since the cap was implemented in Sept 2011.

    [USD, CAD]
    USD-CAD initially fell after the mix of data, where stronger Canadian manufacturing data took the spotlight. The rebound in oil prices also lent some support to the CAD, though most seemed to think Friday's oil rally was nothing more than pre-weekend short covering related. USD-CAD later moved under 1.1300, after peaking just shy of 1.1390 early in the session, touching 1.1265 lows.

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