2013-04-05 06:30 (UTC)
XE Market Analysis
There was more volatile trading in Asia as local traders reacted to yesterday's bold BoJ policy moves. In early trade USD-JPY rose sharply to reach new trend highs of 97.19, but corrected thereafter to sit at the 96.30 area. The dollar was weaker against EUR and GBP after yesterday's monetary policy decisions and after a jump in U.S. jobless claims added to a run of data misses ahead of today's NFP report, which exacerbated a sharp turnaround in the value of the USD. This was reflected in EUR-USD's two figure turnaround from new 2013 lows of 1.2745. Elsewhere, AUD continued to meet selling pressure on upticks after it was unable to take out 1.0500 barriers yesterday. Rising tension on the Korean Peninsula also unnerved investors and this could effectively support the dollar's safe haven credentials in the coming sessions if the situation develops.[EUR, USD]
EUR-USD maintained narrower ranges in contrast. After surging two big figures from 1.2745 to 1.2949 highs on Thursday it traded quietly around 1.2920-40 for most of the Asian session. Draghi offered a rather dour assessment on the economic outlook and maintained his dovish credential. Investors were encouraged, however, after he gave his backing to maintain the EUR in the face of recent adversity. He went further to quash investor uncertainty over Cyprus and said this was not a template for future eurozone bailouts. Positioning featured heavily, yet was also exaggerated by U.S. jobless claims, which added to a run of data disappointments ahead of today's NFP release.[USD, JPY]
USD-JPY surged to new trend highs of 97.19 in early trade as bond yields continued to hit mult-year lows. The 10-year benchmark carved out an early record lows of 0.315%, but turned around sharply to 0.615% during the Asian afternoon on profit taking. Such was the intensity of bond action that trading was halted twice during the Asian session. Regional investors not only had the BoJ impact to digest, but Korean tensions also escalated, while another softer U.S. job report also raises caution ahead of today's NFP report, which effectively undermined the dollar ahead of the European open. USD-JPY dip buying should continue ahead of 96.00 initially and 95.80 lower down, but topside movement may be a little more restrained until the N.Y. open.[GBP, USD]
Cable consolidated after it extended to the 1.5240 area following Thursday's decent short squeeze, which followed 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 absorbed macro fund supply. Cable added more than two full figures from Thursday's lows, but it should meet offers from 1.5250 to 1.5275, while ahead of U.S. NFP data movement should also be more restrained. .[USD, CHF]
EUR-CHF is supportive around 1.2150 as EUR and USD flows have effectively left the cross net unchanged. Dollar long profit taking was evident after the ECB press conference and after another disappointing U.S. data release ahead of the NFP report. USD-CHF tumbled from 0.9527 highs, leaving stops intact just above and headed to lows of 0.9380 by Thursday's U.S. afternoon session. The pair backed up in Asia to 0.9410 and looks vulnerable on the daily chart, though severely oversold levels have helped it to a degree.[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.