2013-03-11 19:21 (UTC)
XE Market Analysis
FX trade was fairly quiet in N.Y. on Monday, though the dollar was mostly lower on the back of slightly elevated risk appetite. There was no data to drive prices, and generally, trade was relatively subdued. EUR-USD found support under 1.3000, and eventually retraced toward 1.3040. Cable moved up toward 1.4930 after posting fresh trend lows near 1.4865. The dollar bloc meanwhile firmed up some, while the better risk levels supported USD-JPY, which found buyers into the 96.00 level, providing an eventual bounce to 96.35. Tuesday's U.S. calendar is light as well, with just Treasury budget data, and a three-year Treasury auction.[EUR, USD]
EUR-USD was steady just under 1.3000, with the softer risk backdrop, and Italy downgrade last week continuing to limit euro upside potential early in the session. The pairing held under 1.3000 through the option cut, where strikes at the level reportedly rolled off. From there, it moved marginally higher, perhaps as stocks turned higher, after starting the session marginally underwater. EUR-USD eventually took out stops at 1.3020-25, on its way to just below 1.3040. With no data to drive the dollar, the improved risk backdrop supported the pairing in afternoon trade, though dealers noted offers coming in under 1.3080.[USD, JPY]
USD-JPY found good support at 96.00, straying just breifly under the figure, before turning higher on the back of improved risk taking levels. The piaring moved over 96.35 in light trade. USD-JPY continues to benefit from the prospects more committed deflation-busting policies, with nominee governor Kuroda having said today that the central bank will consider buying derivatives if he's confirmed as governor and also showing that it will be ready a quick expansion in monetary stimulus.[GBP, USD]
Cable moved under 1.4900, posting trend lows near 1.4865. A soft U.K. growth outlook continues to weigh on sterling, as government austerity does not help the economic picture. Some domestic GBP demand has been seen under 1.4900, though dealers report good selling interest in place at 1.4900-20. Cable is likely to see further downside, with the technical picture reflecting a market sentiment that continues to be distinctly bearish. Sterling close last week below 1.5000, the first daily or weekly close at these levels since the third quarter of 2010, having failed to sustain rebounds above 1.5000 during the latter part of last week. Today the pair is stuck about 15-20 pips above Friday's 1.4915 closing low. Resistance can be expected at 1.4955-60 (trendline) and particularly at 1.5000 (previous low-high pivot level).[USD, CHF]
EUR-CHF is posting a consolidation day after four straight days of higher highs, presently making time around 10 pips below Friday's closing bid level of 1.2369. Ditto for USD-CHF, after making a six-month peak on Friday. The CHF has been an underperformer lately, driven by rising risk appetite in global financial markets, which the Swiss currency correlates inversely to. Today, stock markets have corrected in Europe from last week's trend highs. Swiss retail sales data for January today were sub-forecasts at +1.9% y/y but had little market impact, and sales were perhaps due a correction after recent strong outcomes. Friday's CPI data, meanwhile, at -0.3% y/y, assured that the SNB will persist with its easy monetary policy and 1.2000 currency limit peg.[USD, CAD]
USD-CAD peaked over 1.0290 into the North American open, though headed steadily albeit modestly lower through the session. The pairing based near 1.0255 in light trade, largely as risk appetite had a positive tilt to it. With no data on either side of the border, focus remained on risk levels. Equities and oil prices were up moderately, keeping downward pressure on USD-CAD.