Home > XE Currency Blog > XE Market Analysis: Europe - Apr 15, 2015

AD

XE Currency Blog

Topics4790 Posts4835
By XE Market Analysis April 15, 2015 2:37 am
    XE Market Analysis's picture
    XE Market Analysis Posts: 3247
    XE Market Analysis: Europe - Apr 15, 2015

    The dollar has managed to rebound some of the lost ground seen yesterday. The AUD underperformed following a weaker than expected set of March data out of China, and while Q1 GDP data came in at six-year low of 7.0%, this was expected. EUR-USD's rebound yesterday stalled at 1.0707 and the pair has ebbed to the low 1.06s. Yesterday's softer PPI and retail sales data influenced the debate about when the Fed is likely to tighten away from June and toward September or later. This makes sense given the dovish lean to the Committee and their fears of a bearish market backlash. This said, the Fed still remains on course for an eventual rate hike, while the euro remains an unpopular currency given Greeaccident concerns and the ECB's QE, despite signs that the Eurozone economy is improving. USD-JPY firmer today after diving to a nine-day low of 119.07 yesterday. The 20- and 50-day moving averages, respectively situated at 119.83 and 119.79, mark resistance.

    [EUR, USD]
    EUR-USD's rebound yesterday stalled at 1.0707 and the pair has subsequently ebbed to the low 1.06s. Yesterday's softer PPI and retail sales data influenced the debate about when the Fed is likely to tighten away from June and toward September or later. This makes sense given the dovish lean to the Committee and their fears of a bearish market backlash. This said, the Fed still remains on course for an eventual rate hike, while the euro remains an unpopular currency given Greeaccident concerns and the ECB's QE, despite signs that the Eurozone economy is improving. We still see a good chance that parity will be reached in EUR-USD. The Mar-12 cycle low at 1.0462 offers an interim focus. Resistance is marked at 1.0700-1.0707.

    [USD, JPY]
    USD-JPY firmer today after diving to a nine-day low of 119.07 yesterday. The 20- and 50-day moving averages, respectively situated at 119.83 and 119.79, mark resistance. USD-JPY's technical picture looks pretty muddy. The pair has been plying a broadly sideways, albeit choppy path since early December, though we remain moderately bullish. The Fed remains on course for an eventual rate hike, and while on an uncertain timetable this is a stance which contrasts that of the BoJ. We see scope for USD-JPY to return to recent highs in the 121.00-122.00 area, and potential to 125.00 beyond here. Support is marked at 119.00-119.07 and 119.25, which is the present position of the 200-day moving average.

    [GBP, USD]
    Sterling has been mixed over the last day, gaining against the underperforming dollar but falling against the euro. An unexpected dip in UK March core CPI to a cycle low of 1.0% y/y from 1.2%, along with concerns about the May-7 election afflicted sterling's performance in cross pairings. A stellar BRC retail sales figure was overlooked, although it portends a strong labour market report on Friday. Regarding the election, the latest projection by the Guardian newspaper (based on current polling) shows a notable development as it gives a Labour-SNP (Scottish Nationalist Party) a clear majority. This wouldn't be great for markets, but would at least mean that a coalition government would likely form rather than a weak minority government.

    [USD, CHF]
    EUR-CHF is slightly firmer after drifting to 10-week lows in the low 1.03s amid the latest bout of euro underperformance. While this is the case the SNB will probably be best advised to sit on its hands, although the SNB said at its March policy review that the franc is "significantly overvalued," and would "remain active in the foreign exchange market, as necessary." Sight deposit data, however, suggest that the SNB hasn't intervened since January, and previous speculation of the SNB having a "soft floor" at 1.0500 has long since been discredited. The post-peg abandonment low is at 0.9714 (according to our data), though we don't anticipate a revisit. For every big figure EUR-USD losses, EUR-CHF has been losing about 50 pips, so even with EUR-USD trading 0.95 handle, on this crude basis, the cross would still be trading above 0.9800. The wildcard for the euro and EUR-CHF is what happens in Greece.

    [USD, CAD]
    USD-CAD has ebbed back under 1.2500, bringing a series of range lows, formed during the broadly sideways trading pattern that's been persisting since January, into scope. These support levels are contained within 1.2651 (the Feb-3 low) and 1.2387 (the Apr-8 low). On the topside, the Mar-17 trend high at 1.2835 and the Aug-2009 high at 1.3063 are key levels.

    Paste link in email or IM