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By XE Market Analysis April 22, 2014 7:07 am
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    XE Market Analysis: North America - Apr 22, 2014

    The USD posted moderate losses against most of the other main currencies. Sterling was the relative outperformer as markets are factoring in risk of a relatively hawkish tone in Wednesday's release of the BoE MPC minutes to the early April policy meeting. Cable lifted to a high of 1.6832 from sub-1.6790 levels, which swings last Thursday's five-year high of 1.6842 back into view. The pound also advanced against the yen and the euro. EUR-USD, meanwhile, eked out gains back above 1.3800, but only managed a high of 1.3810, stalling well short of Monday's 1.3830 peak. ECB's Coere may have spoiled any bullish appetite as he said that there is room to cut rates further while singling out recent euro appreciation has contributing to low inflation. USD-JPY dipped about 30 pips from the Tokyo-session high to a intraday low of 102.41, subsequently steadying around 102.55. AUD-USD logged a six-day peak of 0.9369. Underpinning the Aussie was data, with Conference Board February leading Index rising to +0.3% from 0.2%, along with a general risk-on backdrop with global stocks markets in bullish mode, aided by a flow of good earnings reports from corporate bellwethers.

    [EUR, USD]
    EUR-USD eked out gains back above 1.3800, but only managed a high of 1.3810, stalling well short of Monday's 1.3830 peak. ECB's Coere may have spoiled any bullish appetite as he said that there is room to cut rates further while singling out recent euro appreciation has contributing to low inflation. We continue to favour the downside in EUR-USD, partly as the ECB is desirous of a weaker euro. Technically, the rally from last's July 1.2042 low to the early March peak of 1.3966 is waning, as indicated by momentum indicators (particularly apparent on the weekly chart, where there is a strong divergence between underlying momentum and price trend). Resistance is marked at 1.3820 and 1.3850-55, support at 1.3785 and 1.3765.

    [USD, JPY]
    USD-JPY dipped about 30 pips from the Tokyo-session high to a intraday low of 102.41, subsequently steadying around 102.55. This continues the oscillation in the 102s. In the bigger picture, the pair is lacking direction 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 remains broadly underpinned amid expectations for this Wednesday's release of the BoE MPC minutes to the recent policy meeting will take a relatively hawkish turn. Last week's stellar labour market report for February and March is also continuing to resonate. Cable has lifted from sub-1.6790 levels back toward last Thursday's five-year high of 1.6842. We target an eventual break above 1.7000. Support is now marked at 1..6800 and 1.6780.

    [USD, CHF]
    EUR-CHF has settled around 1.2200 again, having recovered from the one-month low of 1.2142 that was seen last on Monday. The cycle low of 1.2104 was left untested. While situation in the Ukraine remains a concern, and this is a potentially supportive factor for the CHF, the threat of SNB intervention into its 1.2000 limit peg is helping to deter franc buying. SNB's Jordan said earlier in the month that Swiss inflation remains "very low," and that the currency cap would still be defended.

    [USD, CAD]
    USD-CAD has settled just above 1.1000 after recovering from the three-month low of 1.0858 that was seen on Apr-9. The failure to make weekly close under 1.0900-10 was disappointing to CAD bulls, to whom we would advise caution as the Fed vs BoC stance should remain broadly supportive of USD-CAD. Resistance is pegged at 1.1059-60 (50-day moving average) and 1.1100 (former pivot level). Support is marked at 1.0985 (20-day moving average) and 1.0942 (Apr-14 low).

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