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By XE Market Analysis November 19, 2013 1:59 am
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    XE Market Analysis: Europe - Nov 19, 2013

    The dollar maintained a holding pattern , leaving EUR close to 1.3500, Cable near 1.6100 and USD-JPY just under 100.00. Demand for JPY picked up as equity markets in Asia were mixed to lower after Monday's late U.S. equity market drop. Japan's Economy Minister Amari said Japan is eyeing a new Y5 tln stimulus package, though it will not be funded with new bond issues. AUD pressed the downside after the RBA minutes said it was prudent to leave rates on hold and not close off the chance of a cut if needed. It also reiterated that AUD was too high and needed to fall to rebalance the economy. Elsewhere, there was talk of demand related to today's record syndication. In addition, China's Commerce Ministry said foreign investment in China remained stable, adding it was not impossible to meet the 8% trade target despite the difficulties in transport and exports.

    [EUR, USD]
    EUR-USD continued to find support on dips, leaving it near the 1.3500 region. Buyers are lined up from 1.3490 to 1.3470, leaving the focus on good size resistance from the 1.3550-60 area, which is the top-end of the range since the start of the month. There were mixed leads from the crosses. EUR-JPY was weighed by the lack of follow through on the topside via stocks, though it is also in territory where Japanese exporter selling has risen, leaving it under 135.00. EUR-AUD made a move up to 1.4430 early on, though pulled back to 1.4385 as demand for AUD picked back up after an early wobble.

    [USD, JPY]
    USD-JPY came under pressure amid the downturn in risk appetite, which forced it from 100.00 to the 99.60 region. Funds were also active on the way down, though the downturn provided an buying opportunity from Japanese accounts that were lined up from 99.80 to 99.50. There are more large option expiries to contend with today, which include exposure at 99.70, 100.00 and 100.50-60. It could keep the pair boxed in again. USD-JPY is seeing limited reaction from policy talk from Japanese officials. There are widespread expectations that both the government and the BoJ will be prepared to support the economy after next year's sales tax hike comes into effect.

    [GBP, USD]
    Cable is still marking time close to the 1.6100 region. It recorded a modest sell-off in the European morning on Monday, which clipped recent gains into 1.6150. A EUR-GBP bid underlined the corrective tone, with macro funds driving the cross back into the 0.8400 region. GBP should experience limited downside pressure against the USD ahead of more potentially supportive U.K. data later this week, along with the BoE minutes.

    [USD, CHF]
    The CHF has been weakening versus both the EUR and USD, as should be expected during periods of risk-on, the current bout of which has been fuelled by dovish remarks by U.S. Fed Chairperson-designate, Yellen. This will be good news for Swiss policymakers given the renewed drop in CPI and PPI numbers into negative territory, developments which in themselves will maintain the SNB's commitment for ultra-loose monetary policy and its currency cap. EUR-CHF resistance is marked at 1.2360 and 1.2375 (the Oct-15 high). Trend support, which has been establishing during the recovery from the late-September lows, comes in ahead of 1.2300. However, we'll need to seen risk appetite hold up if EUR-CHF is to recovery the 1.2400 handle.

    [USD, CAD]
    USD-CAD followed the greenback's general trend lower on Monday, with the pairing touching intra day lows near 1.0415. However, a thick layer of buying interest was noted at 1.0400, and this put a floor under the pairing. Corporate types had been sidelined with the pairing brushing around 1.0500 last week, though were now in a better buying mood into 1.0400. The pairing made its way back to 1.0435-40 by the time the Asian session got underway.

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