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By XE Market Analysis June 21, 2013 7:06 am
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    XE Market Analysis: North America - Jun 21, 2013

    The dollar eased a touch after it corrected overbought levels, while stocks and commodities were also steadier compared with Thursday's levels. Europe got positive guidance from a late Nikkei rebound, but the rest of Asia was under water on China liquidity concerns and Fed tapering fears. USD-JPY traded in a relatively wide range in Europe considering the lack of flows. Japanese buyers underpinned, but the upside was capped by option flows and a European account sell order. EUR-USD was narrowly mixed ahead of 1.3200 and Cable was capped at 1.5530 by an Asian sovereign. Meanwhile, the CHF eased up a touch as the flight to safety dropped off a fraction, while AUD pulled back from the brink as commodities found a modicum of support.

    [EUR, USD]
    EUR-USD saw limited upside. It pulled back from 1.3255 in Asia and was capped from the 1.3250 area in early Europe. There was a brief move to the downside that led to a 1.3210 low print, but overall there was no appetite to force a break of range. It found light support after USD-JPY pulled back from over 98.00 after headed under 97.40, though EUR-JPY's pullback from 129.60 into 128.70 ensured that EUR-USD gains were limited throughout. Given the extent of today's ranges option expiries may keep players on either side of the market, with strikes at 1.3200 and 1.3250 for today's cut.

    [USD, JPY]
    USD-JPY traded quite a wide range considering the lack of interest in Europe. It headed over 98.00 early on as Japanese demand accelerated after the Nikkei closed 1.66% higher having traded more than 2% lower during the Tokyo morning. Semi-official support in the stock market was widely tipped, though investors took some heart from USD-JPY's move higher on Thursday in the wake of the Fed policy outcome. Yesterday's break back into the Ichimoku cloud was supportive and position traders are calling for a move back towards the 100.00 region. However, a large 98.00 expiry limited upside move and a European name caught the intra-day market long and it headed to 97.30 before settling around 97.50 ahead of the N.Y. open.

    [GBP, USD]
    Cable pulled back from 1.5530 and headed to 1.5470-75. A negative overhang on the daily chart contributed to profit taking by longs, while an Asian sovereign and a fund name were flagged on the way down. Today's option expiry at 1.5500 should provide a modicum of support, while the intensity in equity market selling has abated, which should reduce appetite for the dollar intra-day. EUR-GBP is mildy supportive, with the potential Vodafone Kabel Deutschland deal still limiting the downside, although it is a modest distance from around yesterday's highs just short of 0.8600.

    [USD, CHF]
    EUR-CHF recovered out of 1.2240 and traded back over 1.2270. However, it is still moderately weaker compared with yesterday's post-SNB levels. The downturn in the cross was influenced by a USD-CHF correction. It pulled back from the 0.9350 region to 0.9240 over the U.S. releases and the N.Y. options cut. From here, equity market chop and position adjustment will guide action into the weekend. EUR-CHF should find decent support on dips, with large orders noted into 1.2220. USD-CHF buy orders are noted from 0.9235-40 and towards the 0.9200-20 region.

    [USD, CAD]
    USD-CAD pulled back a bit after 1.0400 held on Thursday. However, the underlying tone is still firm. Equity markets are still fragile and commodity markets remain heay, albeit at slightly improved levels as markets correct ahead of the weekend. We expect dip buying to persist in USD-CAD, with better demand seen into 1.0335 and 1.0320. There is interim resistance from 1.0400, where sovereign names were tipped recently, but a break of there will see the May 29, 2013 peak of 1.0420 targeted eventually.

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