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By XE Market Analysis November 18, 2013 2:08 pm
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    XE Market Analysis: Asia - Nov 18, 2013

    The dollar was soft through much of the morning session, though regained some composure after the London close. TIC outflows and softer house builders sentiment had marginally negative impact on the greenback. Initial comments from the Fed's Dudley painted a rosier picture for the U.S. economy, which briefly supported the dollar, though he later qualified his statements, saying there is not enough growth momentum yet to give the Fed confidence in the labor market outlook. The buck turned a touch lower following the later comments. EUR-USD peaked at 1.3542, before slipping to 1.3495, and then recovering over 1.3510. USD-JPY fell briefly under 99.90, though found support from Japanese names, and headed back to 100.20.

    [EUR, USD]
    EUR-USD edged out intra-day highs just over 1.3520. EUR-JPY guided the pair higher in fairly slow trade. Demand for EUR-JPY steepened as the N.Y. session got underway with the leverage community positioning for further upside as U.S. equity futures point to opening gains for the cash market. Upside EUR movement is likely to be a bit on the slow side though due to good resistance into 1.3550. EUR-USD inched to 1.3497 lows in the aftermath of Fed's Dudley remarks earlier, though continues to find support under the figure. Intra day dip buying remains in place, while some option related purchases have been noted as well, while standing bids at 1.3470-50 could put a floor under the euro through the afternoon.

    [USD, JPY]
    USD-JPY expiries reduced volatility since late on in the European morning. An early move into 100.15 after the N.Y. open ran into option related sellers that were trading gamma ahead of today's large 100.00 expiries. The pairing moved back over 100.00, after touching 99.88 lows in the aftermath of the softer housing data, and 10:00 EST option expiry. Buyers returned however, with EUR-JPY buying aiding the dollar pairing, and Japanese dollar buying interest. Intra day offers are in place from 100.25, so narrow ranges ultimately prevailed.

    [GBP, USD]
    GBP recorded a modest sell-off midway in the European morning. Asian account offers were noted into 1.6150 after the London open, which encouraged intra-day accounts to cut longs and 1.6100 expiries reinforced the downturn. A EUR-GBP bid underlined the corrective tone, with a macro fund buy order lifting it from 0.8460-65 to 0.8395. GBP should experience limited downside pressure against the USD ahead of more potentially supportive U.K. data later this week, along with the BoE minutes. Intra-day, Cable stops could get filled through 1.6075 if EUR-GBP clears offers from 0.8400.

    [USD, CHF]
    The CHF has been weakening versus both the EUR and USD, as should be expected during periods of risk-on, the current bout of which has been fuelled by dovish remarks by U.S. Fed Chairperson-designate, Yellen. This will be good news for Swiss policymakers given the renewed drop in CPI and PPI numbers into negative territory, developments which in themselves will maintain the SNB's commitment for ultra-loose monetary policy and its currency cap. EUR-CHF resistance is marked at 1.2360 and 1.2375 (the Oct-15 high). Trend support, which has been establishing during the recovery from the late-September lows, comes in at 1.2325. We'll need to seen risk appetite hold up if EUR-CHF is to recovery the 1.2400 handle. Bullish prospects for USD-CHF seem good given the Fed's renewed commitment to dovish policy, though today's soft U.S. data delayed such a prospect. We look for am eventual recovery to the 0.9250 area. .

    [USD, CAD]
    USD-CAD followed the greenback's general trend lower overnight, with the pairing touching intra day lows near 1.0415. Bids at 1.0430-20 were chewed through in early North American trade, though a thicker layer of buying interest was noted at 1.0400, and put a floor under the pairing. Corporate types had been sidelined with the pairing brushing around 1.0500 last week, though were now in a better buying mood into 1.0400. The pairing made its way back to 1.0435 in afternoon trade.

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