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By XE Market Analysis April 15, 2014 5:00 pm
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    XE Market Analysis: North America - Apr 15, 2014

    Not too much net movement today. EUR-USD managed to edge out a fresh sic-day low of 1.3790 in a move triggered by a sub-expectations German ZEW sentiment outcome, though this was offset by forecast-beating trade figures and the euro settled back on the north side of 1.3800. Elsewhere, sterling quickly recovered from a post-CPI dive, with Cable returning to levels around 1.6730 after a brief dive to 1.6708. A new cycle low of 1.6% y/y in U.K. CPI hadn't been entirely expected. However, Cable ran into a cluster of good buy orders ahead of 1.6700, and there are also expectations for a solid labour market report tomorrow, which should see unemployment dip back to 7.1% and confirm the first positive rate in real average household incomes. AUD settled moderately lower following the release of the RBA minutes to the April policy review, which noted that the AUD was still high by historical standards and that the exchange rate will be less supportive of the economy than before, although the overall tone was quite positive and said that interest rates would remain steady for a prolonged period. Some commentaries also attributed the Aussie's softening to a liquidity draining operation in China today, in addition to China's credit report. AUD-USD dipped to 0.9385 from the 0.9420 area, but remained above yesterday's 0.9376 low. USD-JPY made time between 101.70 and 102.00.

    [EUR, USD]
    EUR-USD oscillated on Eurozone data, where a sub-expectations German ZEW sentiment outcome was offset by forecast-beating trade figures. The euro logged a fresh six-day low of 1.3790 on the ZEW headline, but subsequently found a footing. With the ECB desiring a weaker euro, and the worrisome situation in the Ukraine, we continue to favour the downside in EUR-USD. We can mark resistance at 1.3807 (50-day moving average) and 1.3821 (the day's peak)., support at 1.3790 and 1.3765.

    [USD, JPY]
    USD-JPY has been making time between 101.70 and 102.00. The market is lacking direction after the sharp turn lower last week from levels above 104.00. The price action reaffirmed the pair's 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]
    Sterling quickly recovered from a post-CPI dive, with Cable returning to levels around 1.6730 after a brief dive to 1.6708. A new cycle low of 1.6% y/y in U.K. CPI hadn't been entirely expected. However, Cable ran into a cluster of good buy orders ahead of 1.6700, and there are also expectations for a solid labour market report tomorrow, which should see unemployment dip back to 7.1% and confirm the first positive rate in real average household incomes. Overall, we expect sterling to remain broadly underpinned. The high in Cable last week stalled a couple of pips shy of the Feb-17 major-trend peak at 1.6822, but we anticipate a break above 1.0700 over the coming period. Support is marked at 1.6695-6700 and 1.6660.

    [USD, CHF]
    EUR-CHF dipped to a one-month low of 1.2142 on Monday, even though SNB's Jordan said that Swiss inflation remains "very low," and that the franc cap would still be defended. The situation in the Ukraine remain a concern, and this is a supportive factor for the CHF. More generally, over the last week Lower stock markets and weak China trade data have lifted the Swiss currency's safe haven premium. The 1.2200 has reverted to being a resistance level, while the cycle low of 1.2104 is a key support. Below 1.2100 the risk of SNB intervention would ratchet up.

    [USD, CAD]
    USD-CAD is back above 1.0900 after logging an three-month low of 1.0858 last Wednesday. Price action has been bearish over the last week, but the failure to make weekly close under 1.0900-10 may disappoint some. We also would advise CAD bulls to exercise some caution, as the Fed vs BoC stance should remain broadly supportive of USD-CAD.

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