Home > XE Currency Blog > XE Market Analysis: North America - Dec 20, 2013

AD

Error message

Notice: unserialize(): Error at offset 40 of 40 bytes in variable_initialize() (line 920 of /var/www/community/webroot/community/includes/bootstrap.inc).

XE Currency Blog

Topics1107 Posts1127
By XE Market Analysis December 20, 2013 6:44 am
    XE Market Analysis's picture
    XE Market Analysis Posts: 856
    XE Market Analysis: North America - Dec 20, 2013

    EUR-USD logged a new two-week low to 1.3625 during Asian trade after breaching yesterday's 1.3651 low and triggering stop orders. The pair subsequently traded moderately higher during the European session, aided by solid German confidence data. The new low reflected a general bid tone in the USD, though the breadth of is gain seemed to shrink. USD-JPY logged a new trend peak, but AUD-USD, for instance, was unable to reach its post-taper low. Decent selling interest in EUR-JPY, which is at near five-year high levels, was reported in the Tokyo session once again. The BoJ maintained monetary policy unchanged, reaffirming its commitment to expand the monetary base by an annual 60-70 tln yen, as was widely expected and to little impact, though USD-JPY appeared to acknowledge the contrasting BoJ versus Fed stances with a rally to a fresh major-trend peak of 104.59. Decent selling interest was seen above 104.50. GBP-USD chopped around the 1.6350 level following a batch of data today, which were net positive, though current account figures highlighted the structural imbalances.

    [EUR, USD]
    EUR-USD logged a new two-week low to 1.3625 during Asian trade after breaching yesterday's 1.3651 low and triggering stop orders. The pair subsequently traded moderately higher during the European session. The new low reflected a general bid tone in the USD, though the breadth of is gain seemed to shrink (USD-JPY logged a new trend peak, but AUD-USD, for instance, was unable to reach its post-taper low). Decent selling interest in EUR-JPY, which is at near five-year high levels, was reported in the Tokyo session once again. EUR-USD's Dec-6 low of 1.3618 is the next support level, ahead of 1.3600. The 50-day moving average is situated at 1.3575. Resistance at 1.3680 and 1.3700.

    [USD, JPY]
    USD-JPY has remain well bid. The BoJ maintained monetary policy unchanged, reaffirming its commitment to expand the monetary base by an annual 60-70 tln yen, as was widely expected and to little impact, though USD-JPY appeared to acknowledge the contrasting BoJ versus Fed stances with a rally to a fresh major-trend peak of 104.59. Decent selling interest was seen above 104.50. EUR-JPY also saw selling interest in Tokyo, reportedly a mixture of Japanese exporter selling and speculative profit taking. We continue to target 105.00 in USD-JPY. .

    [GBP, USD]
    GBP-USD chopped around the 1.6350 level following a batch of data today. We continue to target 1.6500 in Cable. Resistance is marked at 1.6370 and 1.6400, support at 1.6320 and 1.6320. S&P affirmed the U.K. 's triple-A rating but kept a negative outlook, saying that the country would be vulnerable to a downgrade if growth was not sustained. Data were net positive, but current account figures highlighted the structural imbalances. Final Q3 GDP came in unrevised at 0.8% y/y, though revised up to 1.9% in the y/y measure, up from 1.5%. There were also upward revisions to the three previous quarters. Government borrowing data for November showed that borrowing between April and November, excluding a number of one-off effects, fell 2.2% from the same period in 2012, at GBP 84.0 bln. The Q3 current account deficit hit its widest since 1989 as a percentage of GDP, coming in at GBP 20.7 bln in Q3, up from GBP 6.2 bln in Q2. The ONS stats office reported that the drag from foreign trade and weaker investment income from abroad caused the sharp widening. This is a worry for U.K. policymakers, and may strengthen the idea to adopt an informal cap on sterling.

    [USD, CHF]
    The CHF has established a weakening path in the wake of the FOMC's stock market friendly announcement, and the currency's safe haven premium is eroding now that the period of Fed policy uncertainty is over. EUR-CHF breached 1.2250, well up on the pre-Fed eight-month low of 1.2166. Resistance comes in at 1.2280, marks a series of former lows seen between October and November. Support is now at 1.2220 and 1.2200. USD-CHF faces resistance at 0.9000, but can be expected to breach this over the coming sessions..

    [USD, CAD]
    USD-CAD settled back under 1.0700 after surging mid-week in the wake of the Fed's decision to commence tapering, breaking above the recent trend high of 1.0707 and rallying to a new three-year peak of 1.0727. Although the Fed upgraded dovish forward guidance to offset its tapering announcement, the Fed's stance contrasts the move dovish BoC. Initial USD-CAD support comes in at 1.0650. The pair is looking stretched technically, which is to say by historical price deviations, so a bullish tactic would be to wait for near-support levels before entering a long position.

    Paste link in email or IM