2013-01-29 11:40 (UTC)
XE Market Analysis
Consolidation and short term orders influenced. The EUR was weighed on by profit taking via EUR-JPY and EUR-GBP. Fund names were noted in the JPY-cross, which influenced a USD-JPY move into 90.35. EUR-GBP fell after a reserve manager sold in good size, which enabled Cable to stabilise ahead of 1.5700, though fundamentally it still looks weak. AUD and NZD were supported throughout after strong domestic fueled good bargain hunting, which fueled highs of 1.0463 and 0.8380, respectively. Today's Italian bill auction saw the lowest yield since March 2010, highlighting just how much eurozone sentiment has improved. German consumer confidence data also beat expectations, which was another positive. However, French confidence data pointed to economic weakness and Spanish retail sales was soft.[EUR, USD]
EUR-USD traded in a tight range either side of 1.3450 following yesterday's inability to break 1.3500. Interest in Asia was mixed due to cross-currents. EUR-GBP's bid tone and a supportive backdrop in EUR-JPY was offset by corrections in EUR-AUD and EUR-NZD following recent gains. In Europe, EUR-USD traded between 1.3415 and 1.3460 as option expiries at 1.3450 influenced for the second consecutive session. EUR was weighed by EUR-GBP selling pressure by a reserve manager, but is still expected to maintain a dip buying mentality, with real money bids lined up into 1.3400 and below.[USD, JPY]
USD-JPY corrected to 90.35 after it struggled to sustain a move into 91.00 in Asia. Fund profit taking was evident via USD-JPY and the JPY crosses, which forced a move lower. Japanese demand was heavy at the lows, but a combination of profit take orders and option flows related to large outstanding option expiries weighed. EUR-JPY headed to 121.20 after it topped out ahead of 122.50 in Asia. It started the European session around 122.20, but sagged as the EUR came under pressure.[GBP, USD]
GBP ran into supply on upticks amid a weak underlying tone following further fund selling on Monday, which forced Cable to trend lows around 1.5675 and EUR-GBP over 0.8580. Expectations of the usual month end related demand for EUR-GBP by a European central bank supported EUR-GBP into 0.8550 early on, but it turned away from 0.8565 and headed to 0.8530 on general EUR selling, which helped Cable up to 1.5730. Cable may still retest levels under 1.5700, though there are reports of very good support from 1.5670 to 1.5650.[USD, CHF]
EUR-CHF headed into 1.2400 as short term accounts fished for stops under 1.2450 in early trade. Selling pressure picked up from late Asia amid corporate demand for swissy and real money selling interest in USD-CHF on upticks, which fueled a move from 0.9265 towards 0.9235. EUR experienced a bout of profit taking after a lack upward momentum, along with talk of reserve management flows, which weighed on the cross. However, short term buyers are tipped into 1.2400 and 1.2370-80, with longs still positioning for much stronger levels.[USD, CAD]
After again failing to decisively take out the 1.0100 level, USD-CAD moved back into 1.0050 as longs reduced positions. Solid selling interest is noted up at the figure, where option and fund backed offers have been reported. To the downside, bids are in place from 1.0040. Traders will watch for November Canada GDP and January Ivey PMI data today, and we look for USD-CAD to remain range bound until then.