2013-04-08 07:34 (UTC)
XE Market Analysis
JPY underperformed in Asia as the BoJ prepared to start its new bond buying scheme, which sent the Nikkei to its highest levels since August 2008. USD-JPY pressed higher from the Asian open from just under 97.80 to reach 98.85, while EUR-JPY headed to 128.35. EUR pulled back from over the 1.3000 region to trade around 1.2980 by late Asia and Cable also traded under Friday's 1.5363 highs. AUD continued to trade on the heavier side following Friday's break lower and it extended into the 1.0350 area. Economic data included a fall in Australia ANZ total job ads for March by 1.5% m/m versus February's 3% rise. Construction remained in a slump, with PMI data moving to 39.0 from 45.6 previously, which was the 34th consecutive fall. Japanese data had no impact, but the February trade balance hit -Y677.0 bln and the current account surplus came in at Y637.4 bln.[EUR, USD]
EUR-USD came under pressure in Asia, partly on profit take orders just above 1.3000 and also as the dollar strengthened due to more USD-JPY upside. It settled around the 1.2980 area, with downside movement largely limited following Friday disappointing U.S. jobs report, which followed a string of softer data. Portugal PM Coelho said his government will cut spending to meet targets after Friday's Constitutional Court ruled against some austerity measures in the 2013 budget. Coelho confirmed his commitment to the fiscal and economic adjustment program under the EU/IMF bailout. More eurozone uncertainty could limit further EUR upside intra-day and bids between 1.2950 and 1.2950 may be threatened. Offers are noted from 1.3040-50.[USD, JPY]
USD-JPY marched higher after BoJ announced the details of the bonds it will purchase this week under the new scheme to target longer maturities. Buying was aggressive from the open after Friday's post-NFP upswing. It started the session ahead of 97.50 and headed to 98.85 on fund demand. There was exporter selling and general profit taking on the way up, which saw some shallow corrective action back towards 98.30, but over it held firm around 98.50. M&A news was also supportive after reports that MUFG will buy Deutsche Bank's U.S. real estate loans for Y360 bln. On the USD-JPY upside option barriers are noted from 99.00, though given the magnitude of BoJ's quantitative easing and the ongoing tensions in North Korea it looks likely that the psychological 100.00 level will be targeted in due course.[GBP, USD]
Cable triggered large buy stops just above 1.5275 and 1.5300 on Friday after the big U.S. payroll miss to trade above 1.5350, which are its best levels since February-20. Price action has turned a bit choppy as offers emerged around 1.5350 in Asia and also as markets consolidate after the pace of Friday's move. Cable in particular may correct overbought levels after it rebounded out of 1.5035 last Thursday. Dip buying is likely on any temporary set backs. Support is noted under 1.5300, while Friday's consolidation zone at 1.5220-40 will also encourage longs.[USD, CHF]
EUR-CHF is supportive around 1.2150 as USD and EUR fluctuations drive broader market moves. It threatened the 1.2130 region in Asia, but good local name support lifted it back to 1.2150, which has been the case now for several sessions. EUR and USD flows have effectively left the cross in a narrow range, as prices chopped between 1.2130 and 1.2180 recently and this theme looks likely to continue. USD-CHF took a hit after the NFP data to trade near 0.9310 and , along with the dollar in general after the soft U.S. employment report, with that pairing sliding to near 0.9310, but has backed up to 0.9360 on light corrective action.[USD, CAD]
USD-CAD experienced consolidation overnight following Friday's surge higher, which came after the mix of jobs data from both sides of the border, where weak reports from the U.S. and Canada, along with a Canadian trade deficit weighed on the loonie. USD-CAD peaked over 1.0230, after idling near 1.0125, but pulled back to 1.0170 after a much improved Ivey PMI outcome, which is a positive lead for the Canada growth outlook.