2013-04-19 19:45 (UTC)
XE Market Analysis
The dollar was broadly higher in light N.Y. trade on Friday, and activity appeared to have been driven largely by pre-weekend USD short covering. There was no U.S. data to drive markets, and overall market interest was subdued. Events in Boston were a distraction though the session, and likely kept some focus off the markets themselves. EUR-USD managed to trade over 1.3125 in morning dealings, though eased back to 1.3050 after the London close. USD-JPY continued its overnight climb, touching 99.50 in thin trade.[EUR, USD]
EUR-USD registered intra-day highs over 1.3125 as market participants digested remarks from ECB's Weidmann. He said current interest rates are appropriate, but the ECB may reassess rates if data changes. Weidmann clarified that comments in the WSJ were not meant to signal a trend change on ECB rates though. EUR price action was fairly choppy as flows related to today's 1.3100 option expiries went through. Market participants are also a bit reluctant to run aggressive positions after getting caught long through 1.3100 after earlier remarks from Schaeuble, only for it to reverse to 1.3070 on good EUR-JPY selling, while U.S. market participation is also low as events unfold in Boston. The pairing succumbed to profit taking in afternoon dealings, seeing a return to 1.3050.[USD, JPY]
USD-JPY broke higher after 99.00 offers gave way, while there was also talk of a GBP-JPY fixing order. Volumes have not been large though, with most of the activity reportedly on stops after a U.S. named turned a USD-JPY position. Japan has managed to avoid overt criticism of its policies judging by comments out of the G20 overnight and this has many market participants positioning ahead of the next BoJ policy meeting. Afternoon trade say the dollar pairing head up to near 99.70 following FinMin Kuroda's comments, where he said the G20 statement will allow the BoJ to implement announced easing steps.[GBP, USD]
Cable corrected the European morning rally, leaving it under 1.5300. It registered highs of 1.5368 midway through the European morning after it rallied out of 1.5285, which was pinned on front running of M&A flows, along with a pick up in risk appetite. During the European afternoon markets turned defensive as U.S. participants focused on developments in Boston. EUR-GBP also got a boost from comments from Germany's Schaeuble and ECB's Weidmann, which fueled a rally out of 0.8525 to 0.8575 and also added momentum to the Cable sell-off, leaving it unchanged on the session. A close under 1.5300 would be a negative set-up for next week.[USD, CHF]
EUR-CHF rallied to one-week highs around 1.2190. The pick up in risk appetite and EUR-JPY demand provided a positive lead. USD-CHF followed the dollar broadly higher in N.Y., moving toward 0.9340 from session lows of 0.9275. Directional bias is still being hamstrung by EUR price action. The EUR tried to break the bottom of the recent range and failed on Thursday and is having a hard time clearing 1.3100 offers today, pointing to more range bound action for the CHF.[USD, CAD]
USD-CAD rallied marginally over 1.0260 after the cool CPI and softer wholesale data, though quickly steadied near 1.0250. USD short covering was a general theme in FX Land on Friday, which ultimately saw USD-CAD drift up to near 1.0270 in very light trade.