2013-05-16 07:57 (UTC)
XE Market Analysis
The dollar moved back toward session highs versus most major currencies in N.Y. afternoon trade on Wednesday, after stumbling in the aftermath of the softer PPI, Empire State Index, and industrial production data early in the session. Stocks rebounded, and as had been the case earlier in the week, firmer equities seemed to be supporting the dollar. The soft Q1 EU GDP data released ahead of the session appeared to have highlighted how much better a position the U.S. is in from a growth standpoint. This could well support the greenback further in the coming days and weeks. Thursday's U.S. calendar includes April CPI, April housing starts, and weekly jobless claims.[EUR, USD]
EUR-USD benefited from the pullback in U.S. yields amid a rash of weaker than expected U.S. data on Wednesday. However, the brief attempt to move higher in Asia ran into selling pressure on upticks and it drifted back towards the 1.2850 region. Bias remains on the downside in the near-term, though option flows and corporate demand is expected to remain steady on dips and 1.2800 may be a difficult level to break. Any move on to the 1.28 handle should draw in more sellers that are looking towards early April lows behind 1.2800 barriers.[USD, JPY]
USD-JPY experiences narrower ranges. Japanese corporate flows remain on both sides of the market, leaving the pair inside a 102.00-50 range. Option barrier exposure from 103.00 is supplying the topside with significant offers and this is encouraging exporters and some funds to lock in current levels. JPY-cross movement is more limited overall due to consolidation in the dollar pairing and a general lack of movement in EUR-USD and Cable, which maintain similiar levels to yesterday's N.Y. session.[GBP, USD]
Cable is steadier over 1.5200 after it rebounded from 1.5175 lows on Wednesday. Upward momentum is still being limited by dollar buyers since the USD index broke a long-term resistance level at 84.00 on Wednesday. Under 1.5200 there are corporate backed bids and light sovereign flows, while a large 1.5150 option expiry is expected to keep the downside in check into the end of the week.[USD, CHF]
CHF has seen a marked picked up in corporate demand after EUR-CHF traded above 1.2500 for the first time since late January and USD-CHF topped 0.9700. Price action is whippy as a result. EUR-CHF pulled back as low as 1.2420 during the Asian session, which served up better levels for fund names out of Europe. Good Swiss and German demand lifted it back to 1.2480, while USD-CHF picked up from 0.9665 back over 0.9700 as dollar demand went through.[USD, CAD]
USD-CAD bottomed out ahead of 1.0150 after it pulled back from the 1.0220 region over the course of Wednesday's North American session. The downturn in USD-CAD was a function of dollar corrective action after U.S. data releases were mostly on the softer side. CAD$ backed up despite softer commodities and equity markets are also on the mixed side today. Dollar buyers are noted into 1.0135-40 behind 1.0150, while sellers are expected to use 1.0200 to fade upticks. Note, option strikes have changed hands over the next week between 1.0200 and 1.0230, which could see the upside attract.