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By XE Market Analysis December 15, 2014 6:11 am
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    XE Market Analysis: North America - Dec 15, 2014

    The dollar recovered during the London AM after trading softer in in Asia. The yen saw some chop, initially declining in the early Tokyo session as the market reacted to PM Abe's landslide victory at the weekend's election, which gives a fresh mandate to yen-negative 'Abenomics' policies, before firming in a delayed 'on-the-fact' manner as the outcome had been widely anticipated. USD-JPY recovered above 118.50 after making a low of 118.14. EUR-USD ebbed back under 1.2450 after failing to challenge Friday's high at 1.2485 during the Asian session's bout of dollar weakness. Cable saw a similar price action, while AUD-USD recovered the 0.8250 area after logging a fresh four-year low at 0.8204 in Sydney.

    [EUR, USD]
    EUR-USD ebbed back under 1.2450 after failing to challenge Friday's high at 1.2485 during the Asian session's bout of dollar weakness. The FOMC meeting this week is generally considered to have dollar positive risk, though the recent dive in oil prices will suit the doves at the Fed. We remain bearish of EUR-USD in the bigger picture on the view of diverging Eurozone and U.S. economic growth, with the ECB inching closer to implementing QE. We look for an eventual make move on the July 2012 low at 1.2042 and see recent gains as opportunity to establish a short position. Resistance is marked at 1.2495-1.2500.

    [USD, JPY]
    USD-JPY recovered the 118.50 handle amid a broader dollar recovering during the London AM session after it had come under pressure in Asia. The yen has been choppy, initially declining in the early Tokyo session as the market reacted to PM Abe's landslide victory at the weekend's election, which gives a fresh mandate to yen-negative 'Abenomics' policies, before firming in on-the-fact manner as the outcome had been widely anticipated. We see that the overall bias for USD-JPY will remain to the upside, anticipating further gains above 120.0.

    [GBP, USD]
    Cable is mired in consolidation at the moment, though as continue to class Cable as being in a bear trend, which has been persisting since the July cycle high at 1.7192. Key resistance is marked at 1.5825-26. The 1.5541 trend low marks support ahead of 1.5500, while the August 2013 low at 1.5102 should be in the crosshairs of bears.

    [USD, CHF]
    EUR-CHF has been bumping along the 1.2010 level the upper level of the rumoured SNB buffer zone between here and the 1.2000 franc cap. SNB boss Jordan said last week that upward pressure on the franc has "intensified," and the central bank said it will enforce the cap with "utmost determination" and is prepared to take further steps if necessary. 'Further steps' would likely centre on negative interest rates, which SNB member Zurbruegg recently argued would be an effective tool as permanent excess liquidity in the Swiss financial system exceeds 300 billion francs. A Bloomberg survey earlier last week found that more than 60% of respondents believe that the SNB will have to use negative interest rates to maintain the cap in the scenario that the ECB commences quantitative easing.

    [USD, CAD]
    USD-CAD logged new major-trend highs just shy of 1.1600. We anticipate further advances, with the CAD likely to trend lower on the back of soft oil prices. Support is marked at 1.1500.

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