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By XE Market Analysis July 24, 2014 7:54 am
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    XE Market Analysis: North America - Jul 24, 2014

    The euro was up and the pound down in London trade, with EURUSD supported by much stronger than expected PMI readings, which unexpectedly showed an acceleration in economic activity. Cable meanwhile, dipped after weaker than expected retail sales numbers. EU stock markets have moved higher, led by peripherals, as Chinese and Eurozone PMI readings revived confidence in the global economy and fuelled risk appetite. U.S. equities look set to open higher as well, with Treasury yields modestly firmer. The U.S. calendar could be of interest on Thursday, with weekly jobless claims, flash PMI and new home sales all on tap.

    [EUR, USD]
    EUR-USD posted new trend lows of 1.3438 in early London trade, after moving sideways near 1.3460 through the Asian session. The losses were short lived however, as the jumped to a high of 1.3484 in the wake of the unexpected bounce in Eurozone PMI readings, which were boosted by a sharp rebound in services confidence. The latter could reflect the latest round of ECB easing measures, though so far, ECB efforts to weaken the currency have failed to bring the single currency down significantly.

    [USD, JPY]
    In a delayed reaction, USD-JPY has touched one-week highs of 101.64, in the aftermath of better China and EU PMI data. This said, the pairing continues to struggle to move higher. A break over the July 15 high of 101.79 could shift sentiment, and improved risk levels through the U.S. session could help the market achieve that.

    [GBP, USD]
    U.K. retail sales came in weaker than anticipated and rose just 0.1% m/m (median 0.2% m/m). The annual rate dropped to a still robust 3.6% from 3.7% y/y in May, with the latter revised down from 3.9% y/y reported initially. This was enought to take some wind out of sterling's sails however, as a still long of sterling market unwound some positions after the sales release. Cable fell to 1.7007 lows, and looks ready to test the 1.7000 mark.

    [USD, CHF]
    EUR-CHF remains entrenched near the 1.2150 mark. The situations in the Mideast and Ukraine are continuing to underpin the Swiss currency's safe-haven premium, though the cross has remained above the Jun-30 low at 1.2133, which was the lowest level seen in three-and-a-half months. Technically, the break of a former uptrend channel support line at 1.2190 opened the way to the mid-1.21s. The cycle low of 1.2104 and 1.2100 are key support levels. We would expect that the threat of SNB intervention into its 1.2000 peg to deter franc buying below 1.2100. SNB's Jordan repeated recently that the central bank remains committed to defending the currency cap.

    [USD, CAD]
    USD-CAD traded inside of its Wednesday trading band, basing at 1.0719m and remaining near the bottom of its recent range. With risk appetite seemingly on the mend after some good PMI data, a test of 1.0700 seems inevitable in the near term. There is no Canadian data on Thursday, so focus will remain on U.S. releases.

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