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By XE Market Analysis September 9, 2013 3:16 am
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    XE Market Analysis: Europe - Sep 09, 2013

    The dollar consolidated Friday's losses, which came over Friday's August NFP release. The release did not provide the clarity on Fed policy that many had hoped for. Syria remained a background issue as the U.S. continued to build international support for action despite the very public difference of opinion between the U.S. and Russia at the G20. Risk appetite got a lift in Asia though on the back of positive economic data out of Japan and China. Japan Q2 GDP was revised up to 3.8% from 2.6% previously and helped USD-JPY rally out of 99.20 back over 100.00. Aiding the upturn was the successful Olympic bid from Tokyo. In China, August trade data revealed a 7.2% rise in exports and a 7% rise in imports, while CPI came in at 2.6%, which was inline with expectations.

    [EUR, USD]
    EUR-USD started the session around 1.3180 following Friday's USD downturn, which came after the subdued August NFP reading. However, there was no appetite to test 1.3200 as USD-JPY firmness kept the topside in check, along with last week's dovish ECB policy stance. Short term support limited the downside for a time, but last Friday's run on the 1.3100 region is still providing a negative overhang on the daily chart and selling into strength is favoured for an eventual run on outstanding option barriers.

    [USD, JPY]
    USD-JPY surged at the Asia Pacific open from 99.20 to 99.80 after Tokyo won the 2020 Olympic games bid and China posted a decent trade number. When the Tokyo session got into full swing USD-JPY probed the 100.00 level and edged out highs of 100.10. Japanese exporters were decent sellers around the highs and it headed back to the 99.50 region. However, impetus is still with the topside amid the recent evolution in U.S. yields on expectations that the Fed will still taper policy. The BoJ are also expected to keep policy easy and the upward revision in Q2 GDP added justification for Japan's current policy stance. USD-JPY is expected to retest Friday's highs around 100.20 and decent resistance from 100.45, which is reportedly protecting another batch of option barrier exposure.

    [GBP, USD]
    Cable continued to hold on to a supportive footing. Recent corrective action has been limited due to robust economic fundamentals Movement into 1.5550 and below has encouraged long positioning, with focus still on a run on 1.5700 and above. Wednesday's U.K. employment release will be key event given the BoE's forward guidance. BoE Carney also speaks before the Treasury Select Committee on policy. Market participants will be interested in his comments in light of the recent rise in money market rates.

    [USD, CHF]
    EUR-CHF steadied over 1.2350 late Friday, where it remained over the course of today's session. USD-CHF consolidated Friday's losses and traded around 0.9380. On Friday it sank from just over 0.9450 to 0.9350 on the U.S. NFP release, though further dollar losses look limited in early Europe. Swiss unemployment came in at 3% as expected and had no impact on the market.

    [USD, CAD]
    USD-CAD fell to 1.0380 from 1.0440 after Friday's combination of a strong Canadian jobs report, and a nearly in-line U.S. report. Sell stops were triggered at 1.0430 and again at 1.0400, though corporate bidding interest was noted under the figure. These held the downside on Friday and it headed back over 1.0400. In Asia, there were sellers noted from 1.0420 as a pick up in risk appetite fueled demand for the commodity bloc currencies. Positive China trade demand underpinning commodities and the demand outlook, which forced USD-CAD back to 1.0390.

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