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By XE Market Analysis November 19, 2013 1:31 pm
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    XE Market Analysis: Asia - Nov 19, 2013

    The dollar was mixed in N.Y. trade on Tuesday, though activity was light overall, and ranges narrow and familiar. The euro posted gains, though continued to struggle over the 1.3500 mark, while USD-JPY edged back over 100.25, where option and Exporter backed sellers were parked. On the economic front, Q3 ECI came in near forecasts and had little impact on the FX market. Equities traded near unchanged after opening lower, while Treasury yields were fairly steady.

    [EUR, USD]
    EUR-USD opened near 1.3500, and wiggled to 1.3490 lows on the back of comments from the ECB's Constancio, who said ECB still has all instruments on the table. This was the third ECB official today stressing that the ECB still has tools at its disposal, though reaction was limited. Buyers again returned under 1.3500, and the pairing posted highs later over 1.3545. The euro continues to have trouble over 1.3500, and with the recent ECB rate cut, and rumblings of Fed taper back in the news, we see EUR-USD continuing to be in sell-the-rally mode.

    [USD, JPY]
    USD-JPY found a decent bid from 99.80 from fund names, which was reportedly an area of interest via offshore funds out Tokyo during the Asia afternoon and the early part of the European morning. The follow through was compounded by EUR-JPY buying interest back through 135.00 to 135.20. Option flows may have thwarted USD-JPY's ability to rally amid more large exposure at 100.00 and 99.50-60 today. According to option desks there are expiries in excess of $10 bln that are rolling off over the course of the week close to the 100.00 region and does explain the consolidation pattern that has limited USD-JPY's upside.

    [GBP, USD]
    Cable was boosted to 1.6120 by model fund demand, but is having a hard time moving away from the 1.6100 option expiry level, which has exerted an influence throughout session. Cable made a late European morning push on 1.6060 on EUR-GBP stops through 0.8400, but follow through was limited by corporate offers and this enabled Cable to regain a modicum of support. GBP dips are still being used as buying opportunities ahead of the BoE minutes tomorrow and more U.K. data later this week. However, without any fresh impetus today short term option flows and repositioning are guiding action. More sideways chop looks likely into the London close.

    [USD, CHF]
    EUR-CHF traded on a stable to firmer footing, leaving it near 1.2330. Equity markets were more mixed today, but the recent bout of risk appetite has kept the cross underpinned, while USD-CHF has found stability ahead of 0.9100 following its pulled back from over 0.9200 early last week. The recent improvement in market sentiment and swissy selling came after 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.

    [USD, CAD]
    USD-CAD moved to session highs of 1.0485, after again finding good support above 1.0400 overnight. The pairing was capped at 1.0470 for a couple of hours, where larger offers were reported. With those eventually filled in, USD-CAD popped to its best level of the day. Another band of sellers is seen at 1.0500 now, with stops noted at 1.0520.

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