2013-04-15 10:37 (UTC)
XE Market Analysis
Risk aversion dominated after disappointing China GDP data overnight, which came in at 7.7% y/y. The dollar and yen firmed up, though most of the action was seen in Asia. In Europe, movement was contained with the exception of the commodity bloc currencies, which responded to a rout across the commodity market complex. AUD broke 1.0400 versus early Asian levels over 1.0500 and USD-CAD rallied out 1.0135 to 1.0225. USD-JPY attempted a rally after it dropped from 98.70 to 97.56 in Asia, but met strong sell interest into 98.30 in Europe as leverage funds were forced out of positions after gold dropped more than 7% through $1400 and silver also plunged just over 10%.[EUR, USD]
EUR-USD was pressured by risk aversion, which fueled selling pressure ahead of the 1.3100 area. EUR got an early fillip on news that Greece reached a deal with troika, which will enable it to receive the next bailout tranche. However, the impact was limited as intra-day accounts keyed off negative stock market performance and the continued rout in commodities, which has left gold more than 5% lower today through $1400. Silver, copper and oil prices are also much weaker as investors reevaluate the growth outlook after last week's softer U.S. data and the disappointing GDP numbers from China. There is interim EUR support at 1.3050 and 1.3035, which are keeping prices supportive, but the lacked of sustained upside movement on resistance at 1.3145-65 last week has increased downside risk.[USD, JPY]
USD-JPY could not sustain moves over 98.00 following sharp losses from 98.70 to 97.55 overnight. Heavy Japanese importer bids emerged overnight and there was tentative demand from speculative accounts that are still trading off the BoJ policy stance. However, gains were limited to the 98.30 region. The short term techinical backdrop weakened and heavy losses in gold and other commodities weighed on leveraged positioning, which support JPY. USD-JPY was well overdue a correction after it raced towards the 100.00 region since BoJ's new bond buy program was announced. There is still scope for a move on 100, but the latest market developments and the U.S. Treasury's latest semi-annual report on FX, whichsaid it will press Japan to refrain from competitive devaluation, could cause a rethink for some long-term players.[GBP, USD]
Cable posted modest losses after it ran into selling pressure from 1.5380 after another failed attempt to sustain a move over 1.5400 in overnight trade. The risk off tone fueled a move into 1.5310, where good support was noted. It has steadied into the European session, but the move out of risky positions is likely to encourage dollar buyers on dips and risk may be on a move under 1.5300 intra-day. Under 1.5300 there is decent support noted towards 1.5250.[USD, CHF]
CHF firmed up from the European open as European names headed for safety as European stocks were weighe by the risk off theme after weaker than expected China GDP data. EUR-CHF met early sellers from 1.2170 and it headed back to Asian lows around 1.2150 and flushed out weak longs to reach intra-day lows under 1.2145. The move into the swissy fueled a USD-CHF move from just over 0.9310 down to 0.9285, though it remains supported just ahead of Asia opening levels around 0.9270 and last Friday's 0.9265 base. Given today's off theme the dollar should find buyers on dips, while EUR-CHF will meet selling pressure on upticks.[USD, CAD]
USD-CAD added to Friday's gains as a sharp drop in commodities fueled heavy CAD$ selling. It traded out of 1.0130-35 and headed over 1.0200. Intra-day stops were filled between 1.0150 and 1.0170 in Asia and it extended through 1.0200 in Europe, which fueled follow through fund interest. CAD-JPY unwinding also featured as Japanese spec repositioned into the Tokyo close and during early Europe. USD-CAD met tentative selling in early Europe, which fueled a slightly easier tone into 1.0185, but risk was on higher levels throughout as commodities experienced a meltdown as global growth uncertainty reared its head.