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By XE Market Analysis October 7, 2014 3:04 pm
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    XE Market Analysis: Asia - Oct 07, 2014

    FX trade was fairly quiet in N.Y. on Tuesday, with the dollar mixed overall. USD-JPY traded a narrow range of 108.12 to 108.43, staying lower on the back of another risk-off session, as equities fell along with Treasury yields. EUR-USD found support into 1.2585, and spent the bulk of the morning session moving higher, eventually peaking over 1.2660, but shy of London's peak. There was again nothing in the way of data to move markets, though the IMF's downgrading of global growth prospects put a damper on risk taking levels. Elsewhere, USD-CAD rallied to near 1.1200, as weak Canadian building permits, and lower oil prices weighed on the CAD. Cable was able to reclaim the 1.61 handle, if only briefly.

    [EUR, USD]
    The dollar was under broad pressure through the morning, as Wall Street went into the tank, and Treasury yields softened. EUR-USD pulled up to 1.2661 highs, from 1.2585 lows into the N.Y. open. Resistance is seem at 1.2675, which represents the high for Monday and last Friday. The euro rallied despite the IMF downgrade of growth prospects, and its call for the ECB to introduce QE.

    [USD, JPY]
    USD-JPY posted a three-day low of 108.11. A test of last Thursday's 108.01 low could be in the cards, and stops under the figure may be in the crosshairs. Lower U.S. yields, and a risk-off environment weighed on the pairing, though downside was hampered by reported Japanese bids into the 108.00 level. We continue to see the pairing higher, following comments from BoJ boss Kuroda, who said last Friday that the central bank is aiming to achieve the 2% inflation as "soon as possible," and that a weak currency won't be problematic so long as it reflects fundamentals.

    [GBP, USD]
    Sterling performance is mixed, showing a slight decline against the euro while making moderate gains on the dollar. Cable's high at 1.6128 surpassed the levels seen just ahead of last Friday's U.S. jobs report release by almost 60 pips. We expect the upside to be curtailed from here, with the interbank and speculation market now running a more neutral net position. Incoming data should show the impact of the stagnating Eurozone economy, which in turn should support BoE MPC member Broadbent's remarks last week that the economy is "not ready" for a rate hike. Cable resistance is marked at 1.6240 (20-day moving average) and 1.6159 (Oct-3 high). Supports are at 1.6045-50 and 1.6025.

    [USD, CHF]
    EUR-CHF is back above 1.2100 after SNB's Jorden said last week that there are additional measures that the central bank could use to enforce the EUR-CHF limit peg at 1.2000. This has put the major-trend low of 1.2044 out of the picture for now. The SNB will find defending the 1.2000 cap a tougher proposition in the context of broad, fundamentally-driven euro weakness than it would be in the case of specific franc outperformance.

    [USD, CAD]
    USD-CAD traded up to 1.1174 highs early, after putting in a floor near 1.1130 in London. Weak Canadian building permits, along with soggy oil prices and soft equities all conspired against the CAD this morning, though good resistance is seen into 1.1180-90, with more offers seen from 1.1200. The pairing later stopped just short of the 1.1200 mark, peaking at 1.1196 before being pushed back down by sellers into the figure. Ugly equities and oil back under $90 will likely keep pressure to the upside for now.

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