2013-04-19 06:41 (UTC)
XE Market Analysis
The dollar and yen traded on an easier footing as risk appetite improved into the weekend. EUR still maintained familiar levels between 1.3000 and 1.3100, Cable traded a tight range just shy of 1.5300 and AUD-USD headed back to the 1.0330 region. There was speculation that China could widen its trading band after PBoC deputy governor recently signaled that policy makers will loosen control over the currency; and UBS suggested it could happen in the next 72 hours. Japan finance minister Aso said no one opposed Japan's monetary policy at the G20 after the U.S. Treasury issued a statement affirming that Japan's monetary policy was for domestic purposes following a meeting between the two. However, South Korea said the weaker yen was a bigger issue than North Korea.[EUR, USD]
EUR-USD traded a narrow range mostly above the 1.3050 area after it failed to break the 1.3020 level on Thursday. EUR-JPY firmness lifted it to 1.3075, where an overhang of offers capped further gains in fairly quiet trade. The market looks range bound currently, with stops noted either side of 1.3000 and 1.3100. The topside is perhaps the weaker side of the market amid very heavy support from 1.3020 to 1.3000 in recent sessions, along with reserve management flows. The underlying trend is still in favor of fading rallies, but if risk appetite holds up into the weekend then a short squeeze may take place.[USD, JPY]
USD-JPY headed higher on positive risk appetite and encouraging remarks from Japan finance minister Aso out of the G20. He said no one opposed Japan's monetary or fiscal policies, which encouraged yen selling. Japanese importer demand was also prevalent on the way up and it helped USD-JPY from 98.10 to 98.68 highs. The dollar pairing should now target a move into 99.00, where are offers are noted, and stops lie above. The JPY crosses saw good demand, which lifted EUR-JPY from just ahead of 128.00 to 128.80 and AUD-JPY rallied from 100.85 to 101.95. BoJ Governor Kuroda said that it has absolutely no intention of targeting FX and believed there was no signs of emerging market bubbles as a result of advanced nations monetary policies.[GBP, USD]
Cable is trading on a firmer footing close to 1.5300, aided by yesterday's rebound and positive risk appetite todau, though it is still struggling to clear away offers from proprietary funds that are trying to keep the pair offered into 1.5300. Option exposure has been noted at this level throughout the week and there are also 1.5250 strike that are rolling off for today's N.Y. A break up through 1.5300 and short term moving averages at 1.5315 will clear our weak shorts, though any moderation in stock gains into the weekend could effectively dampen the upturn. Over 1.5315 there are good offers towards 1.5340-50, while interim bids are seen from 1.5250 and 1.5220.[USD, CHF]
There is still limited interest to add to speculative via the CHF. EUR-CHF marks time between 1.2135 and 1.2175, which has now been the case for well over a week. USD-CHF is suspended over 0.9300, but directional bias in this pairing will be dependent on EUR-USD price action. The EUR tried to break the bottom of the recent range and failed on Thursday and is now back at the familiar 1.3070 area. A EUR break higher, which is now looking more likely would tip USD-CHF back below 0.9300 and towards support at 0.9250 and lower down in front of 0.9200.[USD, CAD]
USD-CAD is hovering over the 1.0230 area after it slipped lower on the back of a more stable risk backdrop. Support remained at 1.0200, but larger stops were reported under the figure. Option related buying under the 1.0230 mark has helped it higher this week, but directional bias into the weekend will come from stocks and commodities. The technical backdrop had shown improvement, but price action has been disappointing into 1.0300, where very sizeable offers are noted.