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By XE Market Analysis November 27, 2014 6:45 am
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    XE Market Analysis: North America - Nov 27, 2014

    The dollar oscillated, dipping against most currencies during the Asia before rebound some during the European AM. EUR-USD met good selling interest following an early London run above 1.2520, subsequently dipping to a 1.2465 low and steadying not far above here thereafter. A batch of European data and ECB-speak had little impact. USD-JPY posted an 11-day low at 117.26 on the back of a generally softer dollar during Tokyo trade, subsequently recovering to the 117.50. Cable tipped back to the mid-1.57s after running to a peak at 1.5826, which is the highest level seen since Nov-12.

    [EUR, USD]
    EUR-USD met good selling interest following an early London run above 1.2520, subsequently dipping to a 1.2465 low and steadying not far above here thereafter. We remain bearish, and look for an eventual move on the July 2012 low at 1.2042 due to diverging Eurozone and U.S. economic growth. Resistance is marked at 1.2531, 1.2568-78, and key resistance is seen at 1.2600. Support is at 1.2443-45, and 1.2358 (Nov-6 low), which is the lowest level traded since August 2012.

    [USD, JPY]
    USD-JPY posted an 11-day low at 117.26 on the back of a generally softer dollar during Tokyo trade, subsequently recovering to the 117.50. Bigger picture, the pair still looks to be consolidating after making a seven-year peak at 118.97 last Friday. PM Abe's rush for a new mandate for Abenomics (elections to be held Dec-14) has driven the recent across-the-board decline in the yen. We expect divergent economic and central bank policy paths between the U.S. and Japan will remain broadly supportive of USD-JPY, anticipating move on 120.00.

    [GBP, USD]
    Cable tipped back to the mid-1.57s after running to a peak at 1.5826, which is the highest level seen since Nov-12. In the slightly bigger picture, the pair looks to have found equilibrium in the upper 1.50s after a four-month bear trend from the July peak at 1.7192. Next domestic focus of note will be the November Markit PMI surveys, due out next, which we think present sterling with neutral-to-negative risk. Cable resistance is marked at 1.5826 (intraday peak) and 1.5850, support at 1.5728-30 and 1.5679-80.

    [USD, CHF]
    EUR-CHF has continued to trade near 1.2020. The cross had lifted from the 1.2010 area after SNB's Jordan repeated his opposition to gold initiative, arguing once again that it would impede the central bank's ability to defend the 1.2000 franc cap. There are also market rumours that the SNB has effectively set up a buffer zone by lining up bids from 1.2010 to 1.2000, and Reuters has reported last week that a sizable bid was conspicuously placed on EBS at 1.2006. SNB's Zurbruegg recently pledged that the 1.2000 franc cap will be defended "with utmost determination" as the bank is prepared to buy an unlimited amount of FX and take further measures immediately if needed. Polls suggest that the "Save our Swiss Gold" initiative (referendum will take place on Nov-30) doesn't have sufficient support, which may be helping to give a EUR-CHF an underpinning.

    [USD, CAD]
    USD-CAD back below 1.1300, with the Loonie benefitting in the wake of the unexpected PBoC rate cut last week. We continue to expect a challenge on the major-trend high at 1.1467, however, on the back of U.S. dollar strength. The likelihood for continued soft oil prices is also a relative downer for the Canadian dollar. Resistance is marked at 1.1400 and 1.1480-1.1500, support is at 1.1230-35.

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