2013-01-31 07:28 (UTC)
XE Market Analysis
EUR maintained a bid tone just a short distance from trend highs around 1.3585 and outstanding option barriers at 1.3600, while AUD fell in quiet trade. AUD came under pressure after a S&P report circulated that said China was at risk of an investment-led collapse, which could impact economices that rely on its demand for resources. JPY experienced a choppy session, but overall USD-JPY traded in a tight range close to 91.00 after it pulled back from 91.40 over the FOMC policy statement, which was largely in line with expectations. It maintained its stance on asset purchaes and noted downside risk. Economic data releases included a recovery in Japanese production and a pick up in PMI. Taiwan GDP beat expectations in Q4, Australia private sector credit and NZ household borrowing both expanded. U.K. GFK consumer confidence came in at -26 from -29 previously, which was slightly better than expected. Meanwhile, the RBNZ left rates unchanged at 2.5% as expected at the Asia Pacific open.[EUR, USD]
EUR-USD maintains a bid tone after it carved out trend highs around 1.3587 after the FOMC. Outstanding 1.3600 barriers weighed a touch on prices, which was evident in Asia, though buyers from the speculative community are lined up at 1.3550 and into 1.3525 and 1.3500-10. Model funds and momentum accounts are in driving seat after the recent break higher, though soveriegns are noted on top in an attempt to keep 1.3600 in check. Above 1.3600 there are levels to note from the middle of November 2011, where very large buy stops are widely tipped (between 1.3625 and 1.3640).[USD, JPY]
JPY was supportive on profit taking activity, but overall it only remained a short distance from yesterday's trend lows. USD-JPY is still being influenced by massive option expiries that are rolling off today and include some 91.50 barriers, which could pave the way for further upside in the sessions ahead. Buyers on the way down include offshore names towards 90.70-80, while Japanese importers have placed bids into 90.50. The JPY crosses met spec names on setbacks, leaving prices skewed to the topside. EUR-JPY is trading comfortably ahead of 123.00 versus recent highs around 123.80 and AUD-JPY is relatively stable around 94.50 after it corrected from 95.40 on Wednesday. There was more policy rhetoric from BoJ deputy governor Yamuchi on the possibility of further easing and BoJ candidate Iwata also backed up the prospect. Overall, nothing significant to add to yen selling pressure and markets were less reactive to the remarks.[GBP, USD]
Cable is underpinned after it dug through offers into 1.5800 on Wednesday after a poor U.S. GDP print, which weighed on the dollar tone as U.S. yields gave up ground. Part of the GBP pick up is being pinned on residual month end demand, as well as repositioning in EUR-GBP aftert it topped 0.8600. A European NCB was a buyer on dips in usual month-end flows, but interest to sell into strength is being pinned on activity related to an asset switch. U.K. assets are tempting for value traders at the moment due to the weaker pound despite poor economic fundamentals.[USD, CHF]
EUR-CHF remained heavy under 1.2350 overnight after Wednesday's move under 1.2400 reinforced downside risk. The cross has struggled to sustain higher levels amid reports of good Swissy demand. Corporates, private clients and asset managers overwhelmed sporadic hedge fund activity. USD-CHF extended recent losses to trade under 0.9100 as month end related activity reinforced bearish technicals. The dollar pairing suffered sharp losses yesterday on corporate selling, which fits with similar flows via EUR-CHF and the swissy should remain on the front foot in month end trade.[USD, CAD]
USD-CAD traded at familiar levels in Asia after it was unable to sustain Wednesday's rally over 1.0050. It pulled back towards the 1.0020 region, where buyers were noted. There is support tipped into the 1.0000 region, which is protecting sell stops lower down, while offers are expected to keep the topside in check from 1.0060.