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By XE Market Analysis November 27, 2013 1:45 pm
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    XE Market Analysis: Asia - Nov 27, 2013

    Profit taking drove the dollar higher versus the euro in N.Y. on Wednesday, though ahead of the Thanksgiving holiday, activity dried up fairly early. EUR-USD managed to trade over 1.3600 early in the session, though was met by solid selling interest over the figure, likely prompted by better than expected U.S. data, including lower jobless claims, a firmer Chicago ISM, and an improved Michigan sentiment index. USD-JPY advanced as well, trading over the 102.00 mark, and staying there into the close. USD-CAD touched 1.0600 though stopped dead in its track under stops seen at 1.0610. Cable meanwhile, gave back some gains, settling under 1.6300.

    [EUR, USD]
    EUR-USD continued to trade on a heavier footing into the London close, dipping toward 1.3560, though fresh bids were reportedly in place into 1.3550. Profit taking was widespread early on the brief moves over 1.3600, though into the Thanksgiving holiday, we think selling has about run its course for now. Going forward, we suspect the ECB will have the final say on how high the euro trades, though for now, it appears to major policy decisions will be made in the very near term.

    [USD, JPY]
    USD-JPY was underpinned on dips in Asia and Europe as short term fund demand and importer bids put a floor in place from the 101.20 area in early trade. It got positive guidance from EUR-JPY's rally out of 137.50 toward 138.80 as the EUR benefited on the German coalition news. Better U.S. data and firmer yields helped propel USD-JPY over 102.00 in morning N.Y. trade, with the pairing peaking just shy of 102.20. It held up into the close, indicating perhaps further upside progress in Asia tonight.

    [GBP, USD]
    Cable succumbed to a profit taking as resistance at 1.6340 put a top in place, leaving it close to support at 1.6250. Cable travelled quite a distance on high volumes today considering that U.K. Q3 GDP met expectations and CBI retail sales disappointed. However, momentum indicators are still pointing higher and the pullback in Cable has corrected overbought levels on the hourly chart. Today's rally also came on real money and macro fund demand and if resistance between 1.6330 and 1.6380 gives way then another squeeze higher is likely. We know of at least two U.S. research desks that turned short this week when Cable was below 1.6250 and they may be forced to bail if 2013 highs give way at 1.6380.

    [USD, CHF]
    EUR-CHF recovered modestly in front of 1.2300 as a USD-CHF rally over 0.9090 supported. Movement in EUR-CHF should remain limited in our opinion as EUR-USD gains stalled out. There is also good support under 1.2300 from local names that are buying ahead of 1.2280, which has held since early October. The SNB have also reiterated its policy stance on any downside threat over the last few months and earlier in the week it warned that it was willing to defend the franc cap in unlimited amounts and also consider other policy options if needed.

    [USD, CAD]
    USD-CAD found good buyers into the North American open, resulting in a move from near 1.0530 to highs of 1.0585, a four-month peak. Not much on the Canadian calendar, though the heavy U.S. slate had some influence. USD-CAD later slipped back to 1.0560 after the U.S. data, though moved to new trend highs over 1.0590 ahead of the London close. Defense of barrier options at 1.0600 was reported, though the pairing did just touch 1.0600 before edging slightly lower. Stops were said to be large at 1.0610, just over the trend high seen four months ago. Over 1.0610, the next target will be 1.0657, the high posted on October 4, 2011.

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