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By XE Market Analysis April 16, 2014 7:31 am
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    XE Market Analysis: North America - Apr 16, 2014

    The dollar has traded mixed against the other majors, rising against the yen but declining against the euro amid a strong rally in EUR-JPY, while Cable was well bid following a much better than expected drop in U.K. unemployment to 6.9% from 7.2% last. Sterling was the outperformer, with Cable surging some 100 pips to a peak of 1.6818, though stalling just shy of last week's peak of 1.6820 and the Feb-17 major-trend peak at 1.6822. EUR-USD got a lift on Cable's coattails, rising to 1.3851, stalling amid a good show of offers at 1.3850. EUR-JPY hit a nine-day high of 141.76. USD-JPY rose to an eight-day high of 102.37. The yen once again correlated inversely with stock market direction, with bourses in both Asia and Europe rallying today, in part aided by forecast beating China GDP data and in part fuelled by good corporate earnings results.

    [EUR, USD]
    EUR-USD got a lift on Cable's coattails today (following a strong U.K. employment report), rising to 1.3851 before stalling amid a good show of offers at 1.3850. EUR-JPY hit a nine-day high of 141.76. We continue to favour the downside in EUR-USD as the ECB is desiring a weaker euro, while incoming U.S. data should affirm recovery remains on track. Resistance is at 1.3850-55, support at 1.3790 and 1.3765.

    [USD, JPY]
    EUR-JPY hit a nine-day high of 141.76 and USD-JPY rose to an eight-day high of 102.37. The yen once again correlated inversely with stock market direction, with bourses in both Asia and Europe rallying today, in part aided by forecast beating China GDP data and in part fuelled by good corporate earnings results. Bigger picture, USD-JPY is lacking direction and is amid a 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 rallied on the U.K. labour numbers, which were highlighted by an unexpectedly large drop in the unemployment rate to 6.9% from 7.2%. Average household income, although a tad below expectations, also affirmed that real incomes are turning positive for the first time in several years. The data has seen short-sterling and Gilt yields spike. Cable has logged a high of 1.6818 so far, and looks set to test the Feb-17 major-trend peak at 1.6822. We have been targeting an eventual break above 1.7000. Support is now marked at 1..6800 and 1.6780.

    [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 remains 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 has been testing 1.1000 after recovering from the three-month low of 1.0858 that was seen last Wednesday. Price action was bearish over the last week, but the failure to make weekly close under 1.0900-10 was disappointing in this respect. 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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