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By XE Market Analysis November 27, 2014 12:15 pm
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    XE Market Analysis: Asia - Nov 27, 2014

    The dollar oscillated, dipping against most currencies during the Asia before rebound some during the European AM. USD-CAD saw volatility, driven back above 1.1300 by sharp declines in oil prices after dipping to intraday lows under 1.1240 following Q3 current account data, which showed a lower than expected deficit of C$ 8.4 bln. EUR-USD met good selling interest following an early London run above 1.2520, subsequently dipping to a 1.2465 low and steadying not far above here thereafter. A batch of European data and ECB-speak had little impact. USD-JPY posted an 11-day low at 117.26 on the back of a generally softer dollar during Tokyo trade, subsequently recovering to the 117.50. Cable tipped back to the mid-1.57s after running to a peak at 1.5826, which is the highest level seen since Nov-12.

    [EUR, USD]
    EUR-USD met good selling interest following an early London run above 1.2520, subsequently dipping to a 1.2465 low and steadying not far above here thereafter. We remain bearish, and look for an eventual move on the July 2012 low at 1.2042 due to diverging Eurozone and U.S. economic growth. Resistance is marked at 1.2531, 1.2568-78, and key resistance is seen at 1.2600. Support is at 1.2443-45, and 1.2358 (Nov-6 low), which is the lowest level traded since August 2012.

    [USD, JPY]
    USD-JPY recovered to the mid-117s in thin trade in the absence of U.S. market liquidity. The pair is consolidating after making a seven-year peak at 118.97 last week. PM Abe's rush for a new mandate for Abenomics (elections to be held Dec-14) has driven the recent across-the-board decline in the yen. We expect divergent economic and central bank policy paths between the U.S. and Japan will remain broadly supportive of USD-JPY, anticipating move on 120.00.

    [GBP, USD]
    Cable tipped back to the mid-1.57s after running to a peak at 1.5826, which is the highest level seen since Nov-12. In the slightly bigger picture, the pair looks to have found equilibrium in the upper 1.50s after a four-month bear trend from the July peak at 1.7192. Next domestic focus of note will be the November Markit PMI surveys, due out next, which we think present sterling with neutral-to-negative risk. Cable resistance is marked at 1.5826 (intraday peak) and 1.5850, support at 1.5728-30 and 1.5679-80.

    [USD, CHF]
    EUR-CHF has continued to trade near 1.2020. The cross lifted from the 1.2010 area after SNB's Jordan repeated his opposition to gold initiative, arguing once again that it would impede the central bank's ability to defend the 1.2000 franc cap. There are also 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 last week that a sizable bid was conspicuously placed on EBS at 1.2006. SNB's Zurbruegg recently pledged that the 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. Polls suggest that the "Save our Swiss Gold" initiative (referendum will take place on Nov-30) doesn't have sufficient support, which may be helping to give a EUR-CHF an underpinning.

    [USD, CAD]
    USD-CAD was driven back above 1.1300 amid sharp declines in oil prices after dipping to intraday lows under 1.1240 following Q3 current account data, which showed a lower than expected deficit of C$ 8.4 bln. Oil prices extended further into four-year low territory with front-month NYMEX crude showing a 6.4% loss as of noon ET.

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