Home > XE Currency Blog > XE Market Analysis: North America - Apr 29, 2014

AD

XE Currency Blog

Topics7223 Posts7268
By XE Market Analysis April 29, 2014 7:15 am
    XE Market Analysis's picture
    XE Market Analysis Posts: 5147
    XE Market Analysis: North America - Apr 29, 2014

    EUR-USD was knocked off highs by an unexpected drop in Eurozone M3 money supply data, which was followed by below-forecast ESI economic sentiment. The pair had earlier been bid and had matched Monday's high at 1.3879 before the data took the euro down a peg, to the 1.3855 area. Preliminary German state CPI for April delivered the expected rebound from March's unexpected drop, though was still slightly below expectations. The national figure for Germany is still awaited, while the Eurozone figure will arrive tomorrow. Sterling took a dive on preliminary GDP data out of the U.K., which came in one tenth of a percentage point below the median expectation in both q/q and y/y measures -- though at 0.8% q/q and 3.1% y/y this is still the best growth since Q2 2010. The market has been quiet bullish on sterling, so the disappointment, although no too significant in terms of underlying trend, prompted long covering. Cable dove nearly 50 pips to a 1.6792 low before finding a footing and recovering the 1.6800 handle. Elsewhere, AUD-USD logged a fresh three-week low as the market reacted to a another dive in iron ore prices as China takes measures to tighten import financing of the resource. USD-JPY lifted above 102.50 after a very quiet Asia session as Tokyo was closed for a Japanese public holiday.

    [EUR, USD]
    EUR-USD was knocked off highs by an unexpected drop in Eurozone M3 money supply data, which was followed by below-forecast ESI economic sentiment. The pair had earlier been bid and had matched Monday's high at 1.3879 before the data took the euro down a peg, to the 1.3855 area. Preliminary German state CPI for April delivered the expected rebound from March's unexpected drop, though was still slightly below expectations. The national figure for Germany is still awaited, as of the time of writing, while the Eurozone figure will arrive tomorrow. Despite the recent perkiness, we continue to favour the downside in EUR-USD as the ECB is desirous of a weaker euro and with disinflation likely to persist in the Eurozone. 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 1.3884-1.3900, key supports at 1.3785 and 1.3765.

    [USD, JPY]
    USD-JPY has continued to oscillate within the 102s. 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 took a dive on the prelim GDP data out of the U.K., which came in one tenth of a percentage point below the median expectation in both q/q and y/y measures, though at 0.8% q/q and 3.1% y/y this is still the best growth since Q2 2010. The market has been quiet bullish on sterling, so the disappointment, although no too significant in terms of underlying trend, prompted long covering. Cable dove nearly 50 pips to a 1.6792 low before finding a footing and recovering the 1.6800 handle. There was some sympathy between Cable and EUR-USD, which had earlier also dipped following an unexpected drop in Eurozone money supply data. EUR-GBP reclaimed the 0.8250 level after dipping to 0.8225. With recent survey evidence pointing to solid growth momentum into Q3, we remain sterling bullish and retain our 1.7000 target for Cable. Key support is marked by recent range lows at 1.6765 and 1.676.

    [USD, CHF]
    EUR-CHF has settled around 1.2200 again, having recovered from the one-month low of 1.2142 that was earlier in the month. The cycle low of 1.2104 and 1.2100 are considered key support levels. While situation in the Ukraine remains a concern, and a potential 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 repeated last Friday that the central bank remains committed to defending the currency cap.

    [USD, CAD]
    USD-CAD has settled 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 following the drop from 12.0-plus levels. We would advise caution to CAD bullish views 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).

    Paste link in email or IM