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By XE Market Analysis September 9, 2013 6:46 am
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    XE Market Analysis: North America - Sep 09, 2013

    The dollar traded on the easier side as risk appetite held up. The dollar continued where it left off after Friday's NFP data failed to provide clarity on the Fed outlook. EUR rose from the 1.3170 area in early Europe and traded into 1.3200 as Eurozone Sentix confidence data moved into positive territory for the first time since July 2011. Cable headed up through the 1.5680 area on underlying GBP demand and M&A news. USD-JPY corrected lower after it topped out over 100.00 in Asia on exporter selling and option related activity. In Asia, it benefited from upbeat sentiment after Japan Q2 GDP was revised up from 3.8% from the 2.6% preliminary reading released last month. China August trade data was also encouraging amid a 7.2% rise in exports and a 7% rise in imports, while CPI came in at 2.6%, which was inline with expectations.

    [EUR, USD]
    EUR-USD moved up to 1.3200 from 1.3170 as intra-day accounts responded to the pick up in Eurozone investor confidence, which posted its first positive number since July 2011. The index came in at 6.5 in September versus -4.9 previously and was much better than the -3.5 median. Also adding to the supportive backdrop is a FT article, which is highlighting a Goldman Sachs report that says U.S. investors are putting more money into European equities than any other time since 1977. It said the early signs of economic recovery and rising business confidence have restored investor appetite for European stocks and there are expectations that the market can rally further on stronger earnings in H2.

    [USD, JPY]
    USD-JPY corrected lower after it failed to sustain the 100 level in Asia. Exporter offers were prevalent on top and momentum was also stymied by very heavy gamma exposure between 100.00 and 100.50 barriers. Technical watchers also suggest that USD-JPY could be vulnerable in the coming sessions as the Ichimoku cloud moves lower. Price action intra-day should be contained under 99.50 by outstanding option expiries at 99.50, 99.25 and 99.00 and there are still importer flows anticipated ahead of 99.00 and between 98.80 and 98.50 if the downside gives way.

    [GBP, USD]
    GBP held firm. Cable headed back over 1.5650 and EUR-GBP drifted back towards 0.8410. Some of the GBP flows were pinned on news that Japan's Suntory will buy the Lucozade and Ribena brands from GlaxoSmithKline for GBP 1.35 bln. GBP should continue to find buyers on dips as the recent acceleration in economic fundamentals reinforces the elevation in market rates and encourages investment inflows. BoE's Fisher told the weekend press that if forward guidance is successful it could hold off from further QE, though reiterated there were no plans to raise rates. Fisher had been one of the members that voted for an expansion of QE. Elsewhere, Chancellor Osborne is expected to say the U.K. economy has turned a corner in speech due for schedule today.

    [USD, CHF]
    EUR-CHF consolidated over 1.2350 after it recovered Friday's brief drop. Tensions between Russia and the U.S. at the G20 triggered a EUR-CHF drop from 1.2390 to 1.2325. However, Friday's close ahead of 1.2350 kept bias with the topside and dip buying should continue in the near-term. Risk appetite was positive overnight after good data from Japan and China in Asia. In Europe, interest was more subdued. The U.S. is still trying to build support for action against Syria ahead of this week's Congress debate on the issue. The U.S. are likely to take action at some point, but it may be limited in scope and should reduce potential market impact. USD-CHF is trading around 0.9380 after it recovered from the 0.9345 region on Friday. U.S. NFP data weighed on the dollar tone, but the Fed are still likely to taper policy and the dollar may pick up into next week's Fed decision. There was no impact from Swiss data today. Unemployment came in at 3% and retail sales rose 0.8% in real terms in July.

    [USD, CAD]
    USD-CAD could be vulnerable on the downside if risk appetite steepens. The market had been positioning for the upside and Friday's fallout has left a lot of weak positions. USD-CAD started the Asia session around 1.0420 and has drifted back into the 1.0380 area ahead of the North American open amid a broadly weaker dollar tone, which is a continuation of Friday's post-NFP move. USD-CAD stops growing behind close-to-market bids into 1.0370 and if former trend-line support gives way at 1.0350 deeper losses look likely.

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