Home > XE Currency Blog > XE Market Analysis: Europe - Aug 05, 2013

AD

XE Currency Blog

Topics1248 Posts1268
By XE Market Analysis August 5, 2013 3:10 am
    XE Market Analysis's picture
    XE Market Analysis Posts: 956
    XE Market Analysis: Europe - Aug 05, 2013

    The dollar consolidated losses seen in the wake of Friday's weaker than NFP releases and other U.S. data misses, which weighed expectations of Fed policy tapering. Asian markets were relatively quiet ahead of key economic data releases out of China later this week and central bank policy decisions from RBA and BoJ. China non-manufacturing PMI data came in at a flat 51.3 reading in June, which offered little fresh impetus. Australia retail sales were unchanged in June, which was weaker than expected and reinforced expectations of a RBA rate cut tomorrow. NZD fell sharply after Fonterra said that some of its products used in infant formula and sports drinks may contain botulism, which saw China ban the company's milk powder.

    [EUR, USD]
    EUR-USD traded a tight range. It has still not been able to clear away offers from 1.3300 despite receiving a moderate lift on Friday over the NFP reading. It traded close to 1.3280 at the Asia close after moving between 1.3265 and 1.3290 over the session. Very short term technical studies still point to higher levels, though economic fundamentals are still likely to encourage real money accounts to sell into strength.

    [USD, JPY]
    USD-JPY remained on the heavier side. The daily trend was lower following Friday's move under 99.00. It started the session just ahead of 99.00, where Asian names were early sellers. Japanese interest to selling AUD-JPY and NZD-JPY weighed on the dollar pairing and it headed to the 98.70 area. Bias for USD-JPY may be lower this week, with the BoJ also expected to leave policy unchanged as it awaits the outcome of PM Abe's economic reform plans. The focus for USD-JPY sellers will be the 97.50-75 region, which held over a series of sessions in late July.

    [GBP, USD]
    Cable is holding firm after it broke to 1.5308 highs on Friday in the wake of weaker than expected U.S. data. Also aiding the GBP tone is a series of better than expected U.K. economic data releases, which has reinforced expectations that the U.K. is now undergoing a period of sustained recovery. The BoE is expected to outline the details of its formal policy guidance when it releases the quarterly Inflation Report on Wednesday. The economic recovery in the U.K. suggests that further rate cuts or QE is off the table, but it should still reaffirm the current easy policy stance for an extended period of time.

    [USD, CHF]
    EUR-CHF is consolidating under the 1.2350 region after it was unable to break 1.2400 on Friday and reverted to levels under 1.2330 amid USD-CHF weakness over the NFP release. USD-CHF is currently trading under 0.9300, which is limiting EUR-CHF's ability to rise in spite of EUR-USD support. Currently, the cross is meeting offers ahead of 1.2350, but sell-interest is being absorbed by a congestion of natural bids between 1.2320 and 1.2300.

    [USD, CAD]
    USD-CAD is still in good shape. Apart from a brief flush out of weak longs on Friday over the NFP release, USD-CAD recovered quickly. It printed 1.0339 lows and then headed back to the 1.0400 region, where it traded during today's overnight session. The move over 1.0350 late last week reinforced bullish expectations after several sessions of base building around 1.0250 and there is scope for a sustained period of movement over 1.0400.

    Paste link in email or IM