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By XE Market Analysis October 1, 2013 2:07 pm
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    XE Market Analysis: Asia - Oct 01, 2013

    The dollar firmed, equities rallied, and Treasury yields were fairly steady in the aftermath of the U.S. government shutdown. FX trade was subdued early in the session, seeing EUR-USD idle on either side of 1.3550, after posting eight month highs near 1.3590 in London. The pairing later slipped to 1.3515 on better ISM data. No one appeared too bothered with the shutdown on Monday, though it remains to be seen how much patience the markets will have with the clowns in D.C. Stock and dollar gains may not last long as a result. With the shutdown likely eliminating any chance for Fed taper in October, the USD may not really have much upside in it for now.

    [EUR, USD]
    EUR-USD slipped after the stronger ISM outcome, taking the pairing through earlier support at 1.3535 to lows of 1.3518. Greenback gains were short lived however, with prices quickly reverting to pre-data levels. Government shutdown and the looming debt ceiling should keep USD gains limited for now, and the euro later managed lows of just 1.3517 before stabilizing.

    [USD, JPY]
    USD-JPY remains in a bear-trend, with a trend resistance line at 98.65, and with the 50-day moving average just above there at 98.67. The pairing based neat 97.65 in London, above Monday's low, though recovered to 98.29 in N.Y. dealings. Dollar-yen eased back to 98.00 in light afternoon dealings, and looks set to retest 98.50 trend lows should 98.30-50 not be taken out overnight.

    [GBP, USD]
    Cable moved off its 1.6260 London highs in N.Y. trade, after stops and barrier options were extinguished on the way up. The better risk appetite took some wind out of sterling's sails, and while technically still looking at further gains, may take a breather for now. Since Thursday, cable has rallied over 250 points, which may invite some near term profit taking.

    [USD, CHF]
    EUR-CHF found support ahead of 1.2200, and managed a run up toward 1.2270 in N.Y. Risk appetite perversely returned after the U.S. government shut down, resulting in higher stocks, and a firmer dollar. After dipping briefly under 0.9000 in London, USD-CHF edged back up to 0.9075.

    [USD, CAD]
    USD-CAD inched up from early session lows, where the 1.0300 mark continued to be good support in North America. Gains were limited to 1.0336, just above Asian highs, but range trade mentality remained. Persistent oil price weakness, and the slide in gold prices didn't help the CAD, though Monday's 1.0340 top should offer initial resistance.

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