2013-03-13 18:31 (UTC)
XE Market Analysis
The dollar popped broadly higher in N.Y. trade on Wednesday, helped by much better than expected February retail sales data. EUR-USD put in fresh three-month lows of 1.2930, and could be poised to test December's 1.2880 base in the not too distant future. USD-JPY reclaimed the 96 handle, while the dollar bloc eased moderately. Cable gave back its London session gains, which came on the back of heavy corporate demand and hedging by U.K. pension funds. The pairing held over 1.4900, though didn't attempt to retake 1.4950. Friday's U.S. economic calendar reveals February PPI, Q4 current account data, and weekly jobless claims.[EUR, USD]
EUR-USD posted new trend lows of 1.2930. Sell stops under 1.2960 were reportedly triggered, pushed through by a large sell order out of London. The pairing may now eye December lows near 1.2880, though bidding interest is seen at 1.2920-00, and could well provide interim support. The pairing reversed modestly higher in afternoon trade as equities improved, which prompted some short covering. The euro inched up to 1.2965 into the close.[USD, JPY]
USD-JPY was supported by a think tank report, which said the BoJ could call an extraordinary policy meeting between the March 25th and March 28th. Iwata said yesterday there would be no emergency meeting following the new regime on March 20th. However, the NY based think tank believe that Kuroda may be keen to make an impression and may want to act on policy ahead of the scheduled meeting on April 3-4th. In 2003, an emergency was called when Fukui took over from Hayami, but there were extenuating circumstances as the Iraq war started on the same day. USD-JPY picked up from 95.95 over 96.25 on the report. A build up of offers are noted towards 96.30-40 and over 96.50, where good offers emerged on Monday.[GBP, USD]
GBP is supported by short covering following Tuesday's drop to new trend lows. Cable hit a 32 month low at 1.4832 after poor U.K. production data, but has backed up on heavy corporate demand and hedging by U.K. pension funds. The recovery gained momentum in Asia from 1.4900 just over 1.4950 and extended to 1.4975 since the European open. The underlying trend should fuel offers towards 1.5000, but trend indicators are severely overstretched and market positioning is excessive at current levels. The WSJ made the case today that it was time to buy GBP. It said that some areas of the U.K. economy are starting to stabilise and there are signs that activity in the housing market is picking up, which could also have a positive impact on the economy.[USD, CHF]
EUR-CHF slipped through 1.2320 support in early N.Y. trade, though rebounded back t o1.2350 as USD-CHF rallied above 0.9530 on the back of better U.S. retail sales. EUR-CHF may struggle to sustain much higher levels from here though due to the underlying EUR tone, which is still skewed to lower levels due to weak fundamentals.[USD, CAD]
USD-CAD moved back to the bottom of its recent range following the higher U.S. retail sales data, eying the 1.0250 mark, which had provided support so far this week. Sell stops were in place from 1.0240, though were never really threatened. Later, the pairing retraced earlier losses as short covering stepped in, and posted intra day highs near 1.0295. CTA accounts were seen lifting offers over 1.0270.