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By XE Market Analysis October 9, 2013 2:30 pm
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    XE Market Analysis: Asia - Oct 09, 2013

    The FX market was very quiet in N.Y. trade on Wednesday, though the dollar managed modest gains overall. The unit has bounced in European dealings on slightly better risk appetite, and continued the theme through the N.Y. session. Into the FOMC minutes release, EUR-USD hovered just over the 1.3500 mark, as USD-JPY held pnto the 97 handle. The AUD and CAD were softer on the firmer risk backdrop, and softer commodity prices, while sterling continued its correction lower. The dollar moved higher after the FOMC minutes, taking EUR-USD to session lows near 1.3485 from 1.3515, and USD-JPY to near 97.65 from 97.35. The minutes revealed that a taper is still potentially in the cards before the end of the year, and that the decision at the last meeting not to make a move was a close call.

    [EUR, USD]
    EUR-USD got fleeting support from ECB's Weidmann, who sees no need for a new LTRO or other measures to respond to market rates now, adding there is no automatic policy reaction from the ECB to changing rates. Weidmann said there could be a short term economic hit from the U.S. government shutdown, but this could be made up for later. EUR-USD bounced to near 1.3520 from near 1.3500, though overall, euro trade was dismally quiet. The pairing dipped to 1.3484 after teh hawkish-tinged FOMC minutes, though steadied quickly.

    [USD, JPY]
    Japanese buyers were prevalent in the 96.70-80 area in Asia, which put a floor in place ahead of large outstanding barriers at 96.50. News of the Yellen nomination for Fed Chair boosted sentiment and this helped USD-JPY back through 97.00 in European trade. N.Y. dealings saw the pairing trade either side of 97.25, though the FOMC minutes helped boost the greenback, taking dollar-yen to a peak just shy of 97.65.

    [GBP, USD]
    Cable moved through 1.5950 support as the dollar bid steepened in N.Y. trade. Dollar demand was the standout trade in Europe, though U.K. data weakness compounded the sterling sell-off ahead of tomorrow's BoE policy outcome, where unchanged policy is expected. Today's numbers may not be as timely as the forward looking PMI release, but does back the BoE's forward guidance. The Cable sell-off will accelerate rapidly if 1.5900 and 1.5875 gives way, which is being hedged against via short dated GBP puts across 1.5900.

    [USD, CHF]
    USD-CHF gains lifted EUR-CHF to the 200-dma. Underlying dollar strength wasthe standout story in the FX market today and USD-CHF is over a full figure higher from Asia lows near 0.9015. News that Yellen is to be nominated as the Fed Chair helped sentiment to a degree. EUR-CHF indicated scope for higher levels yesterday when macro names emerged ahead of 1.2250 and it also met buyers from 1.2265 in Asia and broke 1.2300 in Europe. SNB's Jordan did not offer anything new in comments made after yesterday's close, but reiterated the importance of the CHF cap and said it was ready to take further measures if required.

    [USD, CAD]
    USD-CAD moved to one-month highs of 1.0383 in early North American trade, though stalled out initially out over the 80 level, as a band of offers was noted up to 1.0400. Talk of barrier option defense was heard, while Asian real money selling was noted as well. Sizable stops were reported over 1.0400, though the September 9 peak near 1.0420 should provide resistance. USD-CAD later touched 1.0407 highs, though ran out of steam, later returning under 1.0390.

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