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By XE Market Analysis February 11, 2014 6:53 am
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    XE Market Analysis: North America - Feb 11, 2014

    There were no data of note out of Europe, and Japan was closed for a public holiday, but there was still some brisk activity in the main currency markets in which the USD traded softer. EUR-USD posted a 12-day peak of 1.3683, extending the gains seen following last Thursday's ECB unchanged policy announcement and Friday's U.S. jobs report disappointment. GBP-USD logged a nine-day peak of 1.6440 before settling, with sterling having found a bid after the release of above-forecast U.K. BRC retail sales report for January. AUD extended its recent gains on a net positive set of Australian data. AUD-USD hit a four-week peak of 0.9038. Australia's NAB business confidence release came in at +8 from +6 in December, and house price showed a median-beating +3.4% gain, which offset an unexpected 1.9% decline in housing finance. The yen was pretty subdued, but remained steady-to-soft as stock markets in Asia and Europe continued to rally (including China, despite the Securities Journal saying that 2014 will be "very difficult" for the economy).

    [EUR, USD]
    EUR-USD posted a 12-day peak of 1.3683. This extended the gains seen following last Thursday's ECB unchanged policy announcement and Friday's U.S. jobs report disappointment. The bigger picture technical picture has shifted to more neutral than bearish following the recovery above the 20- and 50-day moving averages, and the break above a six-week bearish trend line, though there are reports of decent selling interest into 1.3688-1.3700. Support comes in at 1.3630-40 and 1.3595-1.3600, which encompasses the 20-day moving average. We still prefer selling into strength as we think there will be a growing focus on the possibility of the ECB taking further easing measures at its March meeting, while we expect the Fed to remain on its tapering course.

    [USD, JPY]
    USD-JPY posted a range of 101.99-102.47, remaining within yesterday's range in the Tokyo market's absence. Japanese markets were closed Tuesday for the National Foundation public holiday. The yen's recent advance has come to a halt as the risk-off theme takes a breather amid a show of positive corporate earnings and decent-enough U.S. payrolls data last week. USD-JPY's initial resistance is marked by Monday's 10-day peak at 102.65. Major support comes in at 100.00-100.36, the latter of which is the 200-day moving average. Strong resistance can be expected at 102.80-103.00.

    [GBP, USD]
    Cable's technical picture remains tentatively bearish, despite the recovery above 1.6400, following the double rejection from forays above 1.6600 in late January and the subsequent breach (and continued hold below) of both the 20- and 50-day moving averages. We continue to target a return to the 1.6200-1.6220 area. Resistance is marked in the region of 1.6433-1.6440, which encompasses recent daily highs, and the current levels of the 20- and 50-day moving average.

    [USD, CHF]
    EUR-CHF has settled after edging out a 10-day high of 1.2250 on Monday as the Swiss currency unwound some of its safe haven premium. The cross had recently been flirting with 1.2200 amid the backdrop of risk aversion in global markets, though the steadying in stock markets has lent the cross some support. The Dec-17 cycle low of 1.2167 has now fallen out of scope. SNB-speak last week affirmed that a removal of the 1.20 limit would only be considered if inflation was much higher had little impact. We wouldn't advise speculative accounts to hold long CHF exposures below 1.2100 given the threat of SNB intervention ahead of 1.2000.

    [USD, CAD]
    USD-CAD saw a fairly sharp rebound after making a three-week low of 1.0967 on Tuesday, but we still favour selling into gains as the price action from late January to early February confirmed a head-and-shoulders pattern topping formation. The recent run to a five-week peak of 1.1224 came with declining bullish momentum, which was a sign that the underlying trend was weakening. Projections target the 1.0800-1.0820 area. Key resistance is marked at 1.1100, ahead of 1.1175 and 1.1200.

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