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By XE Market Analysis September 22, 2014 2:44 pm
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    XE Market Analysis: Asia - Sep 22, 2014

    FX trade was relatively subdued in N.Y. on Monday, as the dollar put in a mixed performance. EUR-USD managed fresh trend lows of 1.2817, though it pushed back to 1.2840 into the close. USD-JPY meanwhile, peaked at 109.19, though was pushed quickly back under the figure, where it spent most of the afternoon. The AUD and CAD stayed down on soft commodity prices, and a weaker risk backdrop, while cable edged up over 1.6360. Wall Street took a fairly large hit, as Treasury yields slipped marginally. On the economic front, the Chicago Fed index missed expectations, as did August existing home sales.

    [EUR, USD]
    EUR-USD made fresh trend lows of 1.2817, though trade was quiet overall. Good bids are reportedly in place from 1.2820 to 1.2800, with option backed interest noted. While we look for an eventual test under the figure, for now, profit taking appeared to be limiting downside progress. A minor short squeeze may be in the cards, targeting 1.2900 near term.

    [USD, JPY]
    USD-JPY ran up to 109.19 highs early, before being pushed to session lows of 108.90 after the U.S. home sales miss. Given the wobbly risk backdrop, upside was contained through the remainder of the session, while last week's trend high of 109.45 should provide good interim resistance. Support is seen at 108.60. The pairing struggled over 109.00 in afternoon trade, ultimately touching 108.85 lows.

    [GBP, USD]
    The pound has settled after a big event week. Scotland's "No" to independence vote avoided what would have been a chaotic break away from the United Kingdom. Markets are now re-focused on U.K. fundamentals, which is characterised by benign inflation and wage data that is leaving the BoE on an on-hold-for-now policy stance, which should keep Cable a sell-on-rallies. There is also be political fallout from the Scottish referendum, with more devolution to Scotland and constitutional changes to come. Cable support is at 1.6300 and 1.6284. Good selling interest would likely be seen into 1.6400.

    [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 touched 1.1003 early on, after making 1.0930 lows in late Asian trade. Resistance comes in at 1.1023, which was last Thursday's highs, with stops noted from 1.1025. The softer risk backdrop, and 5-year low in the Bloomberg commodity price index should keep the pairing supported for now. Later, USD-CAD rallied to a one-week high of 1.1037 as markets digested BoC Senior Deputy Wilkins' dovish assessment of the neutral policy rate, reportedly tripping light stops from 1.1025 in the process. There was little follow through, but the next upside target comes in at 1.1071-1.1098, last Tuesday and Monday peaks. Fresh bids are now moving in at 1.1000-1.0990.

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