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By XE Market Analysis June 12, 2013 6:23 am
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    XE Market Analysis: North America - Jun 12, 2013

    Consolidation set in by the time the European morning ended, leaving EUR unchanged just under 1.3300. Cable was higher on the session as the recent upturn was supported by more positive U.K. data. The early action out of Europe was dominated by leverage flows, which weighed on the CHF, JPY and USD. However, once again USD-JPY's inability to sustain much higher levels cut into the topside and after the recent bout of deleveraging short term accounts were quick to take profit. Elsewhere, the commodity bloc currencies saw heavy flows early on. This time it was driven by an AUD surge up to 0.9540, which forced USD-CAD into 1.0170 and NZD-USD up to 0.7975. There was speculation that funds were repositioning, while some sources tipped flows related to Japan Marubeni buying Rio Tinto's Australian coal stake.

    [EUR, USD]
    EUR-USD lacked momentum over 1.3300. An early move higher carried the EUR to 1.3335, where very good sell orders were noted. Asian sovereigns and U.S. corporate orders forced a subsequent reversal to 1.3275. EUR-cross flows also weighed as EUR-JPY gave back all of the opening gains to trade net unchanged from the London open at 128.30 from 129.35, while EUR-CHF pulled back from 1.2335 to 1.2310. Early moves in the European market were directly influenced by stocks. After a better start regional indices gave back some of their opening gains.

    [USD, JPY]
    USD-JPY is holding up following the move up from 96.00 in Asia to 97.00 after the London open. Early demand out of Europe from 96.40 was pinned on a Japanese agency, while good cross-JPY demand went through the commodity bloc currencies as retail names see value after Tuesday's meltdown. Of note, AUD-JPY managed to avoid a move through 90.00, where more large stops are noted. The move on 97.00 ran into sell-orders from exporters and there was light sell-interest from fast money accounts. If USD-JPY manages to hold steady today then large 97.00 option expiries may attract into the N.Y. session. On the downside a very large digital option at 95.00 is due to roll off tomorrow, but unlikely to be a factor unless stocks take another turn for the worse. Overnight, the Nikkei overcame earlier losses and closed close to flat following speculation that the GPIF may be looking to buy the index towards 13,000. The futures market is currently trading around 13,350 from overnight lows of 13,015.

    [GBP, USD]
    GBP benefited from U.K. employment data, which beat expectations. Cable traded at 1.5680, which is just a few pips from last week's 1.5684 peak. GBP continues to enjoy a resurgence in investment inflows as U.K. economic fundamentals point to an improvement in economic activity. The pick up in sterling forced EUR-GBP to 0.8470 after stops gave way between 0.8485 and 0.8475. Early talk that Vodafone may make a bid for Kabel Deutschland encouraged some light demand around 0.8495-00 after the London open, but the underlying trend in sterling overwhelmed speculative flows. Since late last week Cable longs have been gearing up for a move on the 200-dma, which lies at 1.5701 today and stops are likely to be heavy above this region.

    [USD, CHF]
    An early move lower in the CHF was unsustained as equity markets lacked momentum. In Asia stocks fell, while European stocks posted modest gains intra-day. Leverage account selling went through the swissy via the USD and EUR, but by the end of the morning both the cross and the dollar pairing consolidated. EUR-CHF was stable ahead of 1.2300 and USD-CHF traded close to 0.9275.

    [USD, CAD]
    USD-CAD headed into the 1.0170 level after an early AUD surge fueled follow through demand for CAD and NZD. There was positive momentum from European stocks, which headed higher, though momentum ran out of steam late on in the European morning. USD-CAD bids at 1.0170 to 1.0150 have kept the downside intact, but it is struggling to move higher currently and if stocks in North America can trend higher then further USD-CAD losses look likely. Sellers of USD-CAD remain from 1.0230 to 1.0250.

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