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By XE Market Analysis January 31, 2014 7:40 am
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    XE Market Analysis: North America - Jan 31, 2014

    The EUR came under some pressure after the weaker than expected inflation number added to speculation of a rate cut by the ECB next week. Eurozone Jan HICP inflation unexpectedly fell to 0.7% y/y from 0.8% y/y in December. The Euro is also slightly weaker against the CHF and heading for its biggest monthly decline since March and the first loss since August against the USD, amid speculation of further easing measures. The USD remains supported by Fed policy tapering, yhough sharply lower U.S. equity futures may dampen dollar gains this morning. Month end trade may result in choppy conditions.

    [EUR, USD]
    EUR-USD eased back marginally, as EU inflation was softer than expected. The pairing touched 1.3518 lows, as it ground through reported bids from 1.3530. Sharply lower U.S. equity futures have supported however, and the euro has rallied back toward 1.3550 in early N.Y. dealings. The Eurozone fundamental picture remains euro bearish, and ECB Draghi reaffirmed this week that interest rates will remain low or lower for an extended period, while the IMF reminded us that Eurozone inflation is "way below target". Cooler inflation data has raised ECB cut expectations.

    [USD, JPY]
    USD-JPY traded near the 102.50 level through the European session, though fell back under 102.20 into the U.S. open, as U.S. equity futures took a dive on softer profit reports after teh close on Thursday. Dollar support remains at 1-2.00, with buyers layered down to 101.50, though stops are expected under that level.

    [GBP, USD]
    Sterling has remained choppy of late, with cable dipping briefly under 1.6450 before returning to 1.6475 into the N.Y. open. Resistance is seen at 1.6500 now, though softer risk levels again may support sterling.

    [USD, CHF]
    EUR-CHF slid lower into the U.S. open, as safe-haven CHF buying returned on the back of diving stock markets, and thin and jittery month-end dealings. The cross fell back to near lows of the year at 1.2217 from London highs near 1.2245. Traders will be hesitant to push too far under 1.2200, as the SNB will be paying close attention.

    [USD, CAD]
    USD-CAD touched 1.1197 highs into the North American open, rallying from near 1.1160 in London. The market appears to be anticipating a softer Canadian GDP report this morning, though gains have been hampered by defense of 1.1200 barrier options, set to expire this morning. A break of 1.1200 will bring stops at 1.1210-20 into quick view.

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