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By XE Market Analysis November 18, 2014 3:02 pm
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    XE Market Analysis: Asia - Nov 18, 2014

    The dollar was sideways to a touch firmer in N.Y. trade on Tuesday, as a hotter PPI outcome provided some USD support. EUR-USD found support into 1.2500, though didn't stray higher than 1.2545 through the session. USD-JPY meanwhile, remained over 116.60 throughout, though the 117.00 mark is becoming a good resistance level, after failing two days in a row to hold the figure. USD-CAD traded over 1.1300 again, as oil prices moved back under $75.00/bbl, while cable managed a brief rally toward 1.5680 before falling back into 1.5630. Wall Street managed moderate gains, while Treasury yields were steady.

    [EUR, USD]
    EUR-USD held steady between 1.2500 and 1.2545 in N.Y. trade, edging briefly over London's 1.2540 peak. The impact of the better German ZEW data before the open appeared to have run its course, and the warmer U.S. PPI data has modest pressure on the euro. Light sell-stops are expected under 1.2500, though the pairing found a floor at 1.2530 in very light afternoon dealings.

    [USD, JPY]
    USD-JPY was range bound through the session, not managing to come near its overnight high of 117.05, though holding over 116.60 since mid-morning. Some uncertainty was injected during the Asian session, where an election was called, and the planned sales tax increase delayed. As a result, the BoJ may want to keep its stimulus powder dry for the time being, which could take the bid out of USD-JPY. Japanese offers are noted from 117.00, while stops are in place at 116.00

    [GBP, USD]
    Sterling saw only a short-lived lift on the CPI release, which matched both our survey and the Reuters survey medians for a 1.3% y/y outcome. Ourselves and many others had anticipated an unchanged 1.2% y/y reading, however, which would have matched September's five-year low, and this explains the initial bid. Cable managed 1.5678 highs in N.Y. trade, though the bid again faltered, taking the pairing to lows near 1.5630 into the close.

    [USD, CHF]
    EUR-CHF remains heavy after clocking a fresh 26-month low at 1.2010 on Monday, which was 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 last 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 implemented as an extra defence if need be.

    [USD, CAD]
    USD-CAD peaked at 1.1305 after the U.S. PPI data, rallying modestly from 1.1290. The pairing based at 1.1260 in London, and made its way higher into the North American open as oil prices gave back overnight gains. WTI traded under $74.25, after peaking at $76.44 overnight. USD-CAD later touched highs of 1.1324, before easing back into 1.1300 in afternoon trade. Support remains at 1.1260, while Monday's 1.1328 high steps in as interim resistance.

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