Home > XE Currency Blog > XE Market Analysis: Europe - Apr 30, 2014

AD

XE Currency Blog

Topics7223 Posts7268
By XE Market Analysis April 30, 2014 3:16 am
    XE Market Analysis's picture
    XE Market Analysis Posts: 5147
    XE Market Analysis: Europe - Apr 30, 2014

    USD-JPY and yen crosses are lower after the BoJ announcement of unchanged policy, which disappointed some who had been expecting an expansion in the Y60-70 tln annual pace expansion of the monetary base, which in the event was left unchanged as the majority had anticipated. The market will have to digest the BoJ's semi-annual outlook and Kuroda's press conference, due after the time of writing. USD-JPY dipped toward 102.30 after opening in Tokyo above 102.60. EUR-JPY saw a similar price action. Japanese stocks fell back from intraday highs, while Asia stock markets more generally have been mixed-to-flat. Japanese data were disappointing, with prelim March industrial production coming in at +0.3% m/m, below the Reuters median for +0.5%, while the April manufacturing PMI dove to 49.4 after 53.9 in March. Elsewhere, EUR-USD drifted lower and tested 1.3800, with ourselves and others having lowered forecasts for today's flash April Eurozone HICP following German data yesterday. S&P downgraded 15 European banks, due to reform restructuring. AUD-USD firmed moderately to the 0.9290 area.

    [EUR, USD]
    EUR-USD drifted lower and tested 1.3800, with ourselves and others having lowered forecasts for today's flash April Eurozone HICP following German data yesterday. S&P downgraded 15 European banks, citing the pressure of reform restructuring. Despite the recent perkiness, we continue to favour the downside in EUR-USD as the ECB is desirous of a weaker euro and with disinflation likely to persist in the Eurozone. Technically, the rally from last's July 1.2042 low to the early March peak of 1.3966 is waning, as indicated by momentum indicators (particularly apparent on the weekly chart, where there is a strong divergence between underlying momentum and price trend). Resistance is marked at 1.3884-1.3900, key supports at 1.3785 and 1.3765.

    [USD, JPY]
    USD-JPY and yen crosses are lower after the BoJ announcement of unchanged policy, which disappointed some who had been expecting an expansion in the Y60-70 tln annual pace expansion of the monetary base, which in the event was left unchanged as the majority had anticipated. The market will have to digest the BoJ's semi-annual outlook and Kuroda's press conference, due after the time of writing. USD-JPY dipped toward 102.30 after opening in Tokyo above 102.60. EUR-JPY saw a similar price action. Japanese stocks fell back from intraday highs, while Asia stock markets more generally have been mixed-to-flat. Japanese data were disappointing, with prelim March industrial production coming in at +0.3% m/m, below the Reuters median for +0.5%, while the April manufacturing PMI dove to 49.4 after 53.9 in March. USD-JPY has been oscillating in the 102s for nearly two weeks now. The pair is lacking direction amid a broad sideways range, roughly contained within 100.00-105.00, which has been in place since early January. This stasis may persist for some time, though technical analysts will be marking this as a potential topping formation after the steep rally from levels around 75.0 that was seen during the second part of last year.

    [GBP, USD]
    We remain sterling bullish. The prelim GDP data out of the U.K. this week came in one tenth of a percentage point below the median expectation in both q/q and y/y measures, though at 0.8% q/q and 3.1% y/y this is still the best growth since Q2 2010, while recent survey evidence is portending solid growth momentum lasting into Q2. We continue to target 1.7000 in Cable. Key support is marked by recent range lows at 1.6765 and 1.6760.

    [USD, CHF]
    EUR-CHF has settled around 1.2200 again, having recovered from the one-month low of 1.2142 that was earlier in the month. The cycle low of 1.2104 and 1.2100 are considered key support levels. While situation in the Ukraine remains a concern, and a potential supportive factor for the CHF, the threat of SNB intervention into its 1.2000 limit peg is helping to deter franc buying. SNB's Jordan repeated last Friday that the central bank remains committed to defending the currency cap.

    [USD, CAD]
    USD-CAD gave up the chase above 1.1000 and slipped to around 1.0950. There are reports that oil settlement inflows have underpinned the Canadian currency in a relative illiquid market. There doesn't appear to have been a fundamental driver. The Arp-9 three-month low of 1.0858 now swings back into view. Bigger picture, USD-CAD has been in a consolidation phase since late January following a four-month rally period from sub-0.9700 levels. We'd need to see daily and weekly closes below 1.1000 to support the idea that a trend reversal is on the cards.

    Paste link in email or IM