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By XE Market Analysis September 4, 2013 2:47 pm
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    XE Market Analysis: Asia - Sep 04, 2013

    The dollar was softer versus most currencies in N.Y. trade on Wednesday, though managed modest gains against the yen. USD-JPY traded back to the top of its recent range, though was still unable to take out the psychological 100.00 mark. EUR-USD meanwhile, managed to breach the 1.3200 level, after long term moving averaged at 1.3135-45 held up earlier this week. The CAD shrugged off the as-expected BoC announcement, and moved in a narrow band throughout the session. Sterling and the CHF were marginally firmer versus the greenback as well. On the economic front, the July trade deficit widened slightly, while the Fed's Beige Book indicated the economy rose at a "modest to moderate" pace, as largelt expected.

    [EUR, USD]
    EUR-USD initially ran into 1.3200 offers on its way up from over 1.3160 early in the session, though eventually breached the figure, posting highs near 1.3220. Long term moving averages at 1.3135-45 had put a solid floor under the pairing this week, and with these holding, short covering was in vogue above 1.3180. From here, standing offers are in place at 1.3230 to 1.3250, which could slow upside momentum. The dollar eased just marginally after the Beige Book, but remained inside of previous trading bands versus major currencies. EUR-USD stayed over 1.3200 into the close.

    [USD, JPY]
    Model fund demand underpinned USD-JPY into 99.30. Short term accounts are taking the lead from the daily chart in slow trade. A break above the top of the Ichimoku cloud at 99.32 on Tuesday was the catalyst for follow through demand and it is now fueling range trading activity, along with option expiries between 99.30 and 99.60. Japanese buyers are expected to buy into 99.00 to 98.70 and there are still dollar longs positioned for a 100 test, though dollar buying has waned due to Syria uncertainty. Ahead of Friday's NFP data the impetus could come from EUR moves over the ECB policy statement on Thursday. There are still EUR sellers noted into strength, but support from 1.3145 to 1.3135 is holding the downside.

    [GBP, USD]
    Cable is consolidating gains above 1.5600. Macro fund selling via EUR-GBP drove Cable through buy stops at 1.5610 and it extended to the 1.5632 highs. Bias for GBP will remain on the topside following this week's run of better than expected U.K. data. Tomorrow's BoE policy outcome is a non-event for the market, where unchanged policy is expected. The 1.5500 region has become a near-term pivot point for position traders, while on the topside the mid-June highs around 1.5750 still stand in the way of a much deeper push higher. N.Y. dealings saw cable idle around 1.5600 into the London close, before moving up near 1.5650.

    [USD, CHF]
    CHF losses were limited by Syrian risk. USD-CHF stalled ahead of 0.9400 and EUR-CHF offers capped at 1.2350 at the European open. The pick up in risk appetite weighed on the CHF on Monday and Tuesday, but there was no wholesale liquidation of positions. The risk of action against Syria also rose overnight as President Obama got backing for limited military action. USD-CH slipped back to lows under 0.9350 in light N.Y. dealings, with the pairing generally following the dollar lower.

    [USD, CAD]
    USD-CAD faded toward 1.0475 into the North American open, easing with the USD in general. The BoC announcement was a non-event for USD-CAD, which moved up over 1.0515 from 1.0505, before dipping to 1.0490. The statement was in-line with expectations, and the CAD was net unchanged after the announcement, trading on either side of 1.0500. Afternoon trade saw the CAD pick up slightly as stocks rallied, though USD-CAD downsidee was limited to 1.0475.

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