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By XE Market Analysis September 19, 2014 3:11 pm
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    XE Market Analysis: Asia - Sep 19, 2014

    After a hectic week, FX trade was fairly quiet in N.Y. on Friday, though the dollar was for the most part, stronger. EUR-USD made a marginal trend low, touching 1.2831, as USD-JPY bounced from 108.60 lows to a peak of 109.10. Yields slipped back slightly as Wall Street faltered moderately. On the data front, leading indicators were the only release, and were generally ignored by markets. Meanwhile, firmer than expected Canadian CPI saw the CAD rally, with USD-CAD touching 1.0887 lows. By the close however, the pairing had clawed back virtually all its losses, touching 1.0978 highs. Cable settled in near 1.6300, following volatility seen in the lead up to the Scottish referendum.

    [EUR, USD]
    EUR-USD continued to slip-slide away after peaking at 1.2877, making new trend lows of 1.2831, and in danger of printing the 1.27 handle. The latest move down marked the third consecutive daily "lower-low", a bearish signal, though with bids layered down to 1.2800, and slowing Friday trading conditions, stops reported underneath the figure will have to wait until Monday.

    [USD, JPY]
    USD-JPY surged to a major-trend high of 109.46 in Asia. EUR-JPY and other yen crosses also posted new highs. The yen underperformed after Japan's Cabinet Office downgraded its economic assessment on the back of weak consumption, flat exports and weak industrial output, though pre-weekend profit taking saw a move back into 108.60. The pairing later recovered to 109.10.

    [GBP, USD]
    The pound has settled after a big event week with Scotland's "No" to independence vote avoiding what would have been a chaotic break away from the United Kingdom. One-month Cable vols dropped sharply over the last two days, to 5.8%, well off the 11.3% 33-high that was seen last week to bring August's 18-year low at 4.35% back into scope. The pair has corrected to the low-to-mid 1.63s after logging a two-week high at 1.6525 during the Asia session when the market reacted to the decisive "No" vote result. Position squaring combined with a generally firm dollar tone has weighed on sterling.

    [USD, CHF]
    The SNB didn't follow the ECB on the path of further policy accommodation, despite the fact that the ECB's additional easing measures meant renewed upward pressure on the CHF. However, the statement signaled that the SNB stands ready to implement negative interest rates even outside of its quarterly policy reviews, if necessary. A further deterioration in the Eurozone's and ultimately Switzerland's growth outlook and a move at the ECB towards broad based asset purchases could therefore trigger an immediate reaction from the SNB on the rate front. As a result, EUR-CHF traders will need to be cautious, as the SNB reiterated its 1.2000 line in the sand, ass the cross touched 1.2067 lows.

    [USD, CAD]
    USD-CAD moved to intra day lows by mid-morning, touching 1.0929, after opening the session near 1.1010. The USD's broad softness today spilled over to USD-CAD weakness, with position paring into Friday's Canadian CPI report apparent. Support is expected into 1.0925, yesterday's low, with further support seen into 1.0900, where option backed bids are rumored.

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