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By XE Market Analysis December 15, 2014 3:11 am
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    XE Market Analysis: Europe - Dec 15, 2014

    The dollar traded softer in pre-European open trade in Asia, while the yen more than gave back early Tokyo losses and traded firmer in 'on-the-fact' manner following the as-expected landslide victory of PM Abe at the weekend's election in Japan. The election outcome gives a fresh mandate to yen-negative 'Abenomics' policies. USD-JPY dipped to a low of 118.14 after an early session spike to 119.06. EUR-USD lifted to the upper 1.24s, though had remained shy of the 1.2485 high as of the time of writing. Cable saw a similar price action, while AUD-USD recovered the 0.8250 level after logging a fresh four-year low at 0.8204. Stock markets in Asia were lower today, with the MSCI Asia Pacific index showing a 0.6% loss. This follows the biggest weekly loss on Wall Street in three years amid concerns of slowing global economic growth, which is also being reflect in commodity prices.

    [EUR, USD]
    EUR-USD lifted to the upper 1.24s, though had remained shy of the 1.2485 Friday high as of the time of writing. We remain bearish in the bigger picture on the view of diverging Eurozone and U.S. economic growth, with the ECB inching closer to implementing QE. We look for an eventual make move on the July 2012 low at 1.2042 and see recent gains as opportunity to establish a short position. Resistance is marked at 1.2495-1.2500.

    [USD, JPY]
    The yen more than gave back early Tokyo losses and traded firmer in 'on-the-fact' manner following the as-expected landslide victory of PM Abe at the weekend's election in Japan. The election outcome gives a fresh mandate to yen-negative 'Abenomics' policies. USD-JPY dipped to a low of 118.14 after an early session spike to 119.06. We see that the overall bias for USD-JPY will remain to the upside, anticipating further gains above 120.0.

    [GBP, USD]
    Cable is mired in consolidation at the moment, though as continue to class Cable as being in a bear trend, which has been persisting since the July cycle high at 1.7192. Key resistance is marked at 1.5825-26. The 1.5541 trend low marks support ahead of 1.5500, while the August 2013 low at 1.5102 should be in the crosshairs of bears.

    [USD, CHF]
    EUR-CHF has been bumping along the 1.2010 level the upper level of the rumoured SNB buffer zone between here and the 1.2000 franc cap. SNB boss Jordan said last week that upward pressure on the franc has "intensified," and the central bank said it will enforce the cap with "utmost determination" and is prepared to take further steps if necessary. 'Further steps' would likely centre on negative interest rates, which SNB member Zurbruegg recently argued would be an effective tool as permanent excess liquidity in the Swiss financial system exceeds 300 billion francs. A Bloomberg survey earlier last week found that more than 60% of respondents believe that the SNB will have to use negative interest rates to maintain the cap in the scenario that the ECB commences quantitative easing.

    [USD, CAD]
    USD-CAD logged new major-trend highs just shy of 1.1600. We anticipate further advances, with the CAD likely to trend lower on the back of soft oil prices. Support is marked at 1.1500.

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