2013-01-18 07:38 (UTC)
XE Market Analysis
JPY and CHF were the main movers in Asia after adding to Thursday's losses, while the USD consolidated as cross-currents distorted directional bias. USD-JPY extinguished large 90.00 option structures after Hamada, who is a key economic adviser to Abe, said USD-JPY at 110.00 is too weak, but 95 or 100 is no problem for Japan. EUR-CHF cleared 1.2500 on more unwinding of short positions and extended towards 1.2570 on good fund demand. Risk appetite was boosted after China Q4 GDP came in a bit better than expected, along with industrial production and retail sales, which helped to boost stocks and also added to carry trade demand. AUD was still rangebound despite China data as the recent failure to clear 1.0600 weighed.[EUR, USD]
EUR-USD was supported on dips and moved out of 1.3360 to just over 1.3390 on good EUR-JPY and EUR-CHF demand, though very good offers from 1.3400 capped gains ahead of the European open. Bias is still on higher levels after Thursday's rally and bids have been raised into 1.3350 and 1.3330. A move over 1.3400-10 would trigger good size stops, though any movement into 1.3450 or higher could be choppy due to large outstanding 1.3500 option structures.[USD, JPY]
JPY weakened again after more policy rhetoric from Japanese officials. Market participants shrugged off a Nikkei editorial, which said a weaker yen is starting to hurt Japanese consumers. Japanese policy rhetoric was persistent, though did not really offer anything new until Hamada, who advises Abe, said that USD-JPY at 95 or 100 is no problem for Japan. USD-JPY jumped from 89.80 to reach trend highs just above 90.20 on short term fund demand. Into next week's BoJ meeting JPY should remain soft, though there may also be good periods of profit taking, which is likely to lead to sharp price swings.[GBP, USD]
Cable is still heavy under 1.6000 after it headed lower during Thursday's N.Y. morning session after large Swiss name selling and EUR-GBP's move up through 0.8350 knock out options. Cable ran into natural buyers into 1.5950 and 1.5930, but tech funds have the 200-dma in their sight just in front of 1.5900. EUR-GBP longs eye resistance into the 0.8400 level.[USD, CHF]
EUR-CHF should experience dip buying after it cleared 1.2500 on more unwinding of short positions and extended towards 1.2570 on good fund demand. Macro funds were very heavy buyers of EUR-CHF on Thursday and similar names were noted overnight, along with short term model funds. Buyers are noted likely into 1.2530 and 1.2500, while larger support is noted from 1.2470. Offers on the topside are largely from option backed accounts due to outstanding 1.2575 and 1.2600 barriers.[USD, CAD]
USD-CAD is still supported on dips, albeit at slightly higher levels after it bottomed out at 0.9840 on Thursday. Larger support is noted from 0.9830 to 0.9800. The pairing had ventured over 0.9880 in Thursday's European morning, though sellers were seen lined up over 80, and more interest is tipped across 0.9900.