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By XE Market Analysis October 30, 2013 2:58 pm
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    XE Market Analysis: Asia - Oct 30, 2013

    The dollar was fairly steady through the morning session Wednesday, with a modestly negative bias on the back of a softer ADP employment report, and a tamer core CPI reading. Activity was light overall into the FOMC announcement, though rallied in the immediate aftermath. Yields edged up, despite no chance for tapering, as the Fed said it would await "more evidence" before trimming asset purchases. The Fed eliminated the comment on rising mortgage rates from the September statement, as well as the remarks on tightening financial conditions. Those latter two factors might have been a little less dovish than many may have priced in. As a result, EUR-USD dipped to 1.3720 from 1.3770, as USD-JPY popped to 98.50 from 98.10.

    [EUR, USD]
    EUR-USD traded to session highs of 1.3778 from 1.3755 after the weaker ADP jobs report, though steadied on either side of 1.3770 into the FOMC meeting. The Fed's status quo announcement resulted in a quick blip up to 1.3785, before sliding quickly to lows of 1.3696, as yields firmed, and dollar short covering set in. Conjecture remains that EUR-USD could still trade higher in the coming weeks amid the Fed policy outlook and potential for Eurozone bank repatriation ahead of the ECB's asset quality review early next year.

    [USD, JPY]
    USD-JPY dipped from 98.20 into 98.08 lows after the softer ADP jobs report, but then backed up to 98.20 and maintained a firmer tone amid very large option expiries at 98.50. The pairing bounced from 98.20 to 98.64 after the FOMC, following the dollar's broad move higher, as Treasury yields ticked higher.

    [GBP, USD]
    Cable consolidates just shy of intra-day highs as movement in the FX market slowed down ahead of the FOMC policy outcome. A marginally softer dollar tone has been noted since midday in the European morning, leaving Cable at 1.6065 after trading inside a narrow 1.6025-1.6078 range since the Asia Pacific open. Cable magnet stops at 1.6000 were unthreatened due to very good support ahead of the psychological level. Cable fell to 1.6000 in the aftermath of the FOMC, where buyers returned.

    [USD, CHF]
    The CHF remained on the softer side, with Swiss data only fueling a small blip down in USD-CHF and EUR-CHF. Recently, dollar rallies have been sold into amid the Fed policy outlook, but a steady hand well into 2014 is now priced in and the dollar downturn may be losing momentum. In fact, post FOMC, USD-CHF climbed back over 90.20.

    [USD, CAD]
    USD-CAD continued to find resistance over 1.0470 through the morning session, as it had since Monday. A layer of offers at 1.0470 was cleared out at 1.0470 in early Asia, though more were said to have taken their place at 1.0475-80. In addition, barrier option defense (Friday expiration of 1.0500's) was expected to be in place from 1.0490. Post-FOMC, the pairing followed the greenback's broad move higher, after grinding through offers from 1.0475 to 1.0490. Barrier options at 1.0500 remained intact (at the time of this writing), as the pairing peaked at 1.0498. Option defense appeared to still be in place however, with USD-CAD again moving under 1.0490.

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