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By XE Market Analysis November 15, 2013 4:42 pm
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    XE Market Analysis: Asia - Nov 15, 2013

    The dollar traded lower into the weekend on Friday, impacted by softer U.S. data. The Empire State index unexpectedly turned negative, while industrial production missed the mark as well, and import prices slipped less than expected. Stocks continued their march higher in the aftermath of Yellen's confirmation hearing on Thursday. In addition, the implications for Fed taper following weaker data likely weighed on the dollar and supported equities as well. EUR-USD managed highs of 1.3505 after opening near 1.3450, while USD-JPY touched 100.10 lows before inching back up near 100.35.

    [EUR, USD]
    EUR-USD opened near 1.3550, and sprinted over 1.3505 in the aftermath of the softer U.S. data. The pairing quickly ran out of juice over 1.3500 however, and eased back to 1.3470 on the back of London pre-weekend position paring. Some option related selling was reported over the figure, though bids were noted into 1.3450, which limited downside. The euro idled slightly higher in light afternoon trade.

    [USD, JPY]
    USD-JPY punched through its Sep-11 peak at 100.30 into the open, and extended to 100.44, which was a new four-month high. EUR-JPY logged a two-week peak just above 135.025, since settling to toward 134.80. Late October forays above 135.00 had proved short-lived, making this level a psychological resistance for market participants. USD-JPY eased back to 100.10 following the U.S. data releases, though found a persistent bid through the morning, ending up back over 100.25.

    [GBP, USD]
    GBP has remained well supported following the strong U.K. labor market data and upwardly revised BoE forecasts of U.K. GDP, which were announced earlier in the week. Markets are bringing forward the expectation for the eventual raising of the repo rate from its prevailing record low of 0.5% (in place since March 2009). Cable advanced following the softer U.S. data, touching 1.6135 in early N.Y., before settling in on either side of 1.6100. Next domestic focus comes with the CBI industrial trends survey, next Tuesday, and the release of the BoE MPC minutes to the early November policy meeting, due Wednesday. We expect both to be net-supportive for sterling.

    [USD, CHF]
    The CHF has been weakening versus both the EUR and USD, as should be expected during periods of risk-on, the current bout of which has been fuelled by dovish remarks by U.S. Fed Chairperson-designate, Yellen. This will be good news for Swiss policymakers given the renewed drop in CPI and PPI numbers into negative territory, developments which in themselves will maintain the SNB's commitment for ultra-loose monetary policy and its currency cap. EUR-CHF resistance is marked at 1.2360 and 1.2375 (the Oct-15 high). Trend support, which has been establishing during the recovery from the late-September lows, comes in at 1.2325. We'll need to seen risk appetite hold up if EUR-CHF is to recovery the 1.2400 handle. Bullish prospects for USD-CHF seem good given the Fed's renewed commitment to dovish policy, though today's soft U.S. data delayed such a prospect. We look for am eventual recovery to the 0.9250 area. .

    [USD, CAD]
    USD-CAD followed the greenback's softer tone earlier, moving to lows near 1.0450, though quickly recovered to 1.0470. The softer U.S. data may have weighed some on CAD sentiment, while faltering equities early on didn't help the loonie either. Oil and gold prices turned slightly USD-CAD positive, though being Friday, with the major data out of the way, a 1.0450 to 1.0500 range contained things. The pairing fell to 1.0445 lows into the close.

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