Home > XE Currency Blog > XE Market Analysis: Asia - Oct 10, 2014


XE Currency Blog

Topics7698 Posts7743
By XE Market Analysis October 10, 2014 3:09 pm
    XE Market Analysis's picture
    XE Market Analysis Posts: 5622
    XE Market Analysis: Asia - Oct 10, 2014

    The dollar was mostly steady to higher in N.Y. trade on Friday, as a wild week kept activity muted into the long North American weekend. Equity market volatility remained, as Wall Street continued to move between positive and negative territory through the session. Global growth and central bank concerns remain the drivers, and generally, we look for more turmoil in the week ahead. The U.S. economic calendar was light, with just import/export prices revealed, which had little impact on the markets. EUR-USD ranged between 1.2610 and 1.2645, as USD-JPY again struggled over 108.00, settling into 107.80.

    [EUR, USD]
    EUR-USD managed a 1.2610 low ahead of the London close, though with a long weekend ahead for much of North America, intra day short covering set in, lifting the pairing back over 1.2635. A very volatile week came to an end with a whimper, as traders headed for the exits a bit early today.

    [USD, JPY]
    USD-JPY held inside at 107.63 to 108.06 high through the session, with the market tired after a busy week, and a long weekend ahead. With the uncertain risk backdrop at play, USD-JPY should continue to struggle over the 108 mark, though over time, we think yield and growth differentials between the U.S. and Japan should keep the dollar underpinned against the yen.

    [GBP, USD]
    Cable has followed EUR-USD lower today, with sterling near net unchanged agaisnt the euro. This has put the pair at a four-day low near 1.6000. We expect Cable to head back to the upper 1.59s. U.K. data this week showed fresh signs of slowing recovery pace with the September RICS house price balance came in at +30%, down from 40%, while the BCC's quarterly economic survey showed the slowest export growth in nearly two years. This follows last week's U.K. September PMI release, which showed the composite reading to have fallen to a six-month low. We expect incoming data will continue to show the impact of the stagnating Eurozone economy.

    [USD, CHF]
    EUR-CHF has settled back to the 1.2100 area, reversing gains seen 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. The major-trend low of 1.2044 has edged back onto the radar screen. 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 fell from near session highs of 1.1220 to 1.1160 lows in the aftermath of the much better Canadian employment report, where new full time jobs surged, and the unemployment rate fell to 6.8% from 7.0%. The weak commodity market backdrop, and risk-off conditions could well temper further downside, though the jobs report was certainly enough to prompt a quick round of selling. The pairing did later reclaim the 1.12 handle, as Canadian dollar shorts may sleep easier through the holiday weekend after BoC Governor Poloz removed the threat of a tightening bias -- planning to abandon forward guidance altogether. Notably, the Bank's dovish tone remained apparent in comments with Reuter

    Paste link in email or IM