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By XE Market Analysis January 13, 2014 6:40 am
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    XE Market Analysis: North America - Jan 13, 2014

    EUR-USD traded modestly lower in quiet trade, making a low of 1.3656 before settling, while the yen extended its post U.S. jobs report advance during Tokyo-less trade in Asia. Encouraging Italian industrial production elicited failed to elicit much market response today. USD-JPY dove to its lowest level seen since Dec-18 of 103.25 before finding a toehold and trading just above here in a narrow range during the European AM session. AUD-USD managed to firm to a one-month high of 0.9073. Data along with firmer stocks in Asia and Europe encouraged AUD buying, while stop related orders were also a factor. Australian ANZ job ads didn't decline as much as expected, at -0.7% in December, while November housing finance data came in near the consensus forecast.

    [EUR, USD]
    EUR-USD has consolidated in the upper 1.36s after extending the rebound from last Thursday's six-week low of 1.3548 following the sub-expectations U.S. payrolls report. The market now lacks direction and we expect broad range trade to ensure in the coming weeks. The dollar bullish view has been put on hold following the U.S. jobs data, which has capped a run of mostly firm Stateside data. In the Eurozone, a relatively quiet week looms as there are no data releases that would change the overall outlook. EUR-USD has initial resistance is marked at 1.3700 ahead of 1.3758-60, support at 1.3650-60..

    [USD, JPY]
    The yen extended its post U.S. jobs report advance during Tokyo-less trade in Asia (Japanese markets were closed for a public holiday). USD-JPY dove to its lowest level seen since Dec-18 of 103.25 before finding a toehold. Stop related selling through 103.80-90 reportedly played a big role in thin trade. The yen crosses saw a similar price action, with EUR-JPY, for instance, diving to its lowest level since Dec-17 of 141.22. The yen's rise seemed incongruous with gains in most Asia Pacific stock markets today (the regional MSCI index ex-Japan was showing a 0.6% gain). In the bigger picture, we the BoJ's expansive monetary policy will continue to drive the yen to fresh lows during 2014. Data this month showed Japan's monetary base surged 46.6% y/y in December to a record Y193.5 tln, illustrating the impact that the BoJ's reflationary policy is having. The BoJ is targeting a monetary base to Y270 tln by the end of the year.

    [GBP, USD]
    We remain sterling bullish, though the 1.6500-1.6510 zone in Cable is a strong resistance point. The case for sterling was strengthened last week by the BoE's latest Credit Conditions survey, which found lenders to be planning a "significant" increase in both mortgage and business lending in Q1. The report is good news, especially concerning business lending, which has been a missing link in the U.K. recovery so far.

    [USD, CHF]
    The CHF has seen some choppy price action in recent sessions, but overall we expect the currency to remain on a bigger-picture softer footing as a consequence of the unwinding in the Swiss currency's safe haven premium as the period of Fed policy uncertainty ended with its decision to commence QE tapering. Resistance comes in at 1.2400, support at 1.2320 and 1.2300.

    [USD, CAD]
    USD-CAD has broken sharply higher over the last week, partly driven by weaker Canadian data and the consequent underpinning of favourable yield differential movement. The pair broke 1.0700, 1.0800 and now 1.0900, taking out its Dec-20 major trend peak of 1.7337 on route. The price action marks a break higher after some pretty choppy price action over the last several of weeks. Resistance can now be expected at 1.0950 and 1.1000, support at 1.0800-1.0820.

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