2013-04-04 21:09 (UTC)
XE Market Analysis
The dollar and yen were mostly weaker in N.Y. trade on Thursday, with USD-JPY continuing to advance following the BoJ action overnight. EUR-USD popped over 1.2945 after making new 2013 lows near 1.2745, as stale and abundant shorts were squeezed out. The pairing's initial slide came as Draghi indicated further easing measures could be in the cards, though later, his clarification that the Cyprus bail-in would not be a template for other EU actions helped euro sentiment. In the U.S. weekly jobless claims were higher than expected and dented risk sentiment. From here, Friday's U.S. employment report may keep volatility contained overnight.[EUR, USD]
EUR-USD broke 2013 lows on Draghi's opening remarks at the post-ECB press conference. Draghi said the monetary policy stance will remain accomodative for as long as needed, which triggered a plunge from 1.2835 through 1.2750. EUR-USD was quickly lent support by a semi-official name and option expiries at 1.2800, which were in excess of EUR 1 bln for today's N.Y. cut. Draghi also offered assurances that the Cyprus bailout was not a template and is absolutely sure that Dijsselbloem comments were misunderstood. The pairing later posted intra day highs near 1.2950, after putting in a new 2013 low of 1.2745 during the ECB press conference. Option expiries at 1.2800 (now rolled off) brought in some buying interest early, though the move over 1.2820 was effective at squeezing out weak shorts. More stops were a facto over 1.2900.[USD, JPY]
USD-JPY benefited from macro fund demand and a strong EUR-JPY bid following the ECB press conference. The dollar pairing firmed up from large option expiry levels at 95.40 to trade into 96.00, while EUR-JPY made a clean move up through the Ichimoku cloud top at 122.50 and filled offers from 122.70 to 123.00 and stops behind on model fund short covering. A positive close should fuel further dip buying in Asia, though ahead of Friday's NFP release there may be some caution.[GBP, USD]
Cable moved back over 1.5200 as intra-day shorts continued to cover after the BoE's steady hand. Aiding the upturn was good size outstanding option expiries at 1.5100 and for the second consecutive session U.K corporate buying has absorbed macro fund supply. The turnaround in sterling forced EUR-GBP back to 0.8470 bids after it met sellers around 0.8500 over the BoE decision, which compared with rally highs of 0.8520. Cable is now nearly 2 full figures from inta-day lows, but it should meet offers towards 1.5250.[USD, CHF]
EUR-CHF is supportive around 1.2150 after USD-CHF demand lifted it out of 1.2135 overnight. The dollar pairing was boosted from 0.9445 back over 0.9500 amid general dollar strength after the BoJ's aggressive policy move and EUR-USD heaviness after disappointing eurozone services sector PMI releases. USD-CHF longs got caught offside after yesterday's failure to clear Monday's highs around 0.9525, but after it corrected overbought levels it is now in good shape to make a run on last week's highs around 0.9550.[USD, CAD]
USD-CAD remained rangebound through the North American session on Thursday, holding firmly inside of 1.0120-70 since Monday. The pairing picked up following the firmer U.S. jobless claims, though activity remained muted into Friday's twin Canada/U.S. March employment reports. Bids were still seen in place at 1.0120-00, with offers noted from 1.0170.