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By XE Market Analysis April 17, 2014 7:32 am
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    XE Market Analysis: North America - Apr 17, 2014

    The dollar maintained a generally soft tone following Yellen's dovish speech yesterday. Trade was quiet in Europe with some countries already off for the long Easter weekend. EUR-USD rose to a new high for the week of 1.3864. Cable, already underpinned following yesterday's stellar labour market data, edged out a fresh five-year high of 1.6842. USD-JPY dipped under 102.00, to a low of 101.86 before settling around 102.00-102.10. AUD-USD initially rose in early Sydney trade, but good selling interest was seen form 0.9390 and the pair drifted back to the 0.9440 area during the European AM session. Data didn't have bearing today. Eurozone March PPI came in slightly below expectations at -0.9% y/y. The Reuters Tankan report found the headline Japan manufacturers index up 7 points, and the non-manufacturers index rising to a record. Australia's NAB Q1 quarterly business confidence survey dipped to a reading of 6, after 8 in Q4.

    [EUR, USD]
    EUR-USD rose to a new high for the week of 1.3864. The move reflected general dollar softness following the dovish speech of Fed boss Yellen yesterday. The euro was itself softer against some other currencies. Eurozone March PPI came in slightly below expectations at -0.9% y/y. We continue to favour the downside in EUR-USD, partly as the ECB is desirous of a weaker euro. Resistance is marked at 1.3865 and 1.3900, support at 1.3790 and 1.3765.

    [USD, JPY]
    USD-JPY dipped under 102.00, to a low of 101.86 before settling around 102.00-102.10. The Reuters Tankan report found the headline Japan manufacturers index up 7 points, and the non-manufacturers index rising to a record, though the data didn't have too much market impact. 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]
    Cable has settled to consolidation after punching above its Feb-17 major trend peak at 1.6822 and logging a fresh cycle high of 1.6842. The move was mostly reflective of general dollar softness following Yellen's speech, though sterling has remained broadly underpinned following Wednesday's stellar labour market report for February and March, and EUR-GBP managed to eke out a fresh six-week low. We have been targeting Cable to 1.7000. Support is now marked at 1..6800 and 1.6780. Activity is winding down now ahead of London's four-day Easter weekend.

    [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 level has reverted to resistance, 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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