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By XE Market Analysis November 21, 2014 2:37 pm
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    XE Market Analysis: Asia - Nov 21, 2014

    The dollar firmed up versus the European major currencies, though was soft against the dollar bloc and the yen in the wake of China's surprise rate cut and ECBspeak signaling improved odds for QE. There was no data on Friday, and while Wall Street was higher, it traded well off its best levels as the session progressed. EUR-USD trade to lows of 1.2376 after tripping stops under 1.2400, while USD-JPY ran into sellers over 118.00, and posted lows under 117.50. USD-CAD sold off on warmer CPI data and an improved commodity backdrop, while cable was range bound under 1.5700.

    [EUR, USD]
    EUR-USD dropped to session lows of 1.2406 early, with stops now seen at 1.2395, just under the November 14 base. A move under there brings the November 7 trend low into focus, with more stops eyed at 1.2355. The ECB announcement of the start of ABS purchases this morning continued to weigh on the euro, which turned lower earlier on comments from Draghi, who for all intents and purposes, opened the door fully to QE. EUR-USD printed 1.2399 lows later, though found buyers near the figure until the London close. London accounts appeared to be net sellers in the morning, though some short covering interest was noted into their close. Once London left for the day, N.Y. accounts were able to push the pairing through stops to a low of 1.2376.

    [USD, JPY]
    USD-JPY took a look at the overnight low of 117.35, stopping at 117.38 before bouncing to 117.55. A layer of bids is reportedly sitting between 117.40 and 117.30, which appeared to stop the bleeding. The pairing had topped out at 118.07 in early trade, where domestic selling interest was noted. Afternoon dealings saw the pairing move back up to 117.95 highs.

    [GBP, USD]
    We remain bearish of sterling in the case against the dollar. We see that the U.K.'s recovery pace will continue to be eroded by economic stagnation across the Channel and slowing in some key emerging economies. Cable ranged between 1.5643 and 1.5693 in N.Y. trade on Friday.

    [USD, CHF]
    EUR-CHF continues to ply a narrow path marginall above 1.2010 and the SNB's no-go limit of 1.2000. There are market rumours that the SNB has effectively set up a buffer zone by lining up bids from 1.2010 to 1.2000, and Reuters has reported that a sizable bid has been conspicuously placed on EBS at 1.2006. SNB's Zurbruegg pledged that that 1.2000 franc cap will be defended "with utmost determination" as the bank is prepared to buy an unlimited amount of FX and take further measures immediately if needed.

    [USD, CAD]
    USD-CAD fell in the aftermath of the much hotter Canadian CPI report, taking the pairing to 1.1192 lows, down from 1.1260 ahead of the release. The move marked the lowest since the end of October, with support now seen at the October 31 low of 1.1185. Another significant move for USD-CAD, as it fell from 1.1326 highs following the news that China cut rates. The rebound in commodity prices drove the CAD higher then, but later, as equities came off the boil, and oil prices gave back some gains, USD-CAD rebounded over 1.1250.

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