2013-03-08 07:42 (UTC)
XE Market Analysis
Consolidation best described trade among the major currencies in Asia ahead of the U.S. jobs report show stopper, aside from JPY weakness, which occurred despite a healthy upward revision to Japan's Q4 GDP data, to +0.2% q/q from -0.4% y/y. The explanation for this is that the Japanese currency tends to correlate inversely with risk-on leads. USD-JPY made a fresh three-and-a-half year high of 95.44 on breaking option barriers at 95.00, and a return to the 100.00 handle is looking perfectly viable as market look forward to the arrival of a new BoJ governor that is set on fixing Japan's chronic deflation problem. EUR-USD consolidated slightly lower after closing in New York just above 1.3100 following yesterday's rally from sub-1.3000 levels that had been seen in the wake of the less-dovish than anticipated ECB press conference.[EUR, USD]
EUR-USD consolidated slightly lower after closing in New York just above 1.3100 following yesterday's rally from sub-1.3000 levels that had been seen in the wake of the less-dovish than anticipated ECB press conference. Thursday's sharp rally had breached six-week trendline resistance to signal a general waning of the bear trend, and likely portending a consolidation period.[USD, JPY]
USD-JPY touched session highs near 95.10, new trend highs. Buyers stepped back in on the move above 94.77, which represented 33-month highs. Prospects for further BoJ measures at the Bank's next meeting may keep the uptrend intact, though for now, Japanese exporter offers may slow gains over 95.00. In addition, seasonal repatriation ahead of Japan's fiscal year end at the end of March may slow upside progress.The BoJ has ample reason to ease policy further, but held fire today ahead of the new central bank policy board takes place for the early April meeting. Governor Shirakawa will step down March 19. ADB Governor Kuroda, who is a strong advocate of aggressive easing, is on his way to being confirmed as the next BoJ Governor.[GBP, USD]
GBP was subdued in Asia. GBP-USD failed to hold onto its post-BoE announcement gains of yesterday (when the central bank refrained from expanding QE), and the price action suggests the market is factoring in a somewhat muddies outlook for sterling. Yesterday's low at 1.4965 will be a key support, as breach would reaffirm the bear trend. There are not U.K. data or other domestic leads due today, so it will all be about what the U.S. jobs report gives us.[USD, CHF]
EUR-CHF broke higher after a model fund fished for stops through 1.2300 on Wednesday. A series of resistance levels gave way and it extended through 1.2310. The next level of important resistance lies at 1.2345 and may cap in the near-term. With EUR-USD fairly static around 1.3000, USD-CHF has taken off from 0.9405 and pushed back over 0.9480, and through option barrier exposure at 0.9450. However, option defensive selling is expected to pick up due to outstanding 0.9500 barriers. USD-CHF eased back toward 0.9420 in N.Y. dealings, with the greenback overall paring gains.[USD, CAD]
USD-CAD tripped up stops on its move under 1.0300, on its way to lows of 1.0285 after the narrower Canadian trade deficit. Support is seen at 1.0270, representing North American low on Wednesday, with more stops noted under the level. The risk backdrop remained marginally positive for the CAD, and following the lack of action from the BoJ, ECB, and BoE, USD positive policy speculation has run its course for now. USD-CAD based at 1.0285 before briefly reclaiming the 1.0300 handle later in the session.