2013-04-09 07:04 (UTC)
XE Market Analysis
USD and JPY fell as stocks posted modest gains. USD-JPY moved up to new trend highs around 99.65, while the JPY crosses also saw decent inflows, which supported EUR, GBP and AUD on dips. Regional sentiment was boosted after China March CPI slowed to 2.1% y/y from 3.2% previously, which was weaker than expected. In Australia, NAB March business conditions worsened to -7 from -3 previously, while business confidence added a point to 2 from 1 previously. U.K. data was also on the firmer side, with the BRC retail sales monitor up 1.9% y/y and the March RICS house price balance came in at -1 from -7 previously. Elsewhere, there is rising speculation that North Korea could be preparing for another nuclear test as soon as Wednesday after North Korean workers did not show up at the Kaesong industrial park, according to Reuters.[EUR, USD]
EUR-USD headed higher as EUR-JPY gains lifted it out of 1.3010 early on. Specs successfully tripped stops above 1.3050 resistance and it extended to 1.3068 highs. There were decent sell orders in place from 1.3070 ahead another previous high from March-17 at 1.3080, leaving further sell stops intact. EUR pulled back to 1.3040 during the Asian afternoon, yet buying interest is prevalent both from a EUR-JPY perspective and also on a better technical backdrop since it rebounded on last week's ECB policy meeting and the string of disappointing U.S. data releases.[USD, JPY]
USD-JPY and the JPY crosses continued to press higher on short term fund flow and Japanese importer demand. Both USD-JPY and EUR-JPY closed in on large outstanding option positions in heavy volumes. USD-JPY headed to the 99.65 area and then pulled back to 99.10 on option related selling, profit taking by some longs and exporter interest. However, good support kept the downside in check and longs are positioned for a break of 100.00 at some point this week. Meanwhile, EUR-JPY reached 129.93 highs and then turned back to 129.40 ahead of the Tokyo close. Elsewhere, Japan finance minister Aso justified the current yen moves, stating they are a correction of previous excessive rises.[GBP, USD]
GBP eased as on Monday short term accounts pared back overstretched positions in Cable, while EUR-GBP benefited from EUR buying interest on dips. Cable experienced a decent sell-off in late Europe after 1.5300 gave way and it extended to 1.5240, where good order flow was noted. It found support on dips in Asia as risk appetite improved, along with better than expected second tier U.K. data. The BRC retail sales monitor gained and the RICS house price survey also picked up pace. Cable headed back to 1.5280, but EUR-GBP firmness around 0.8530 capped further gains.[USD, CHF]
EUR-CHF remained supported after the improved EUR tone lifted it above 1.2180. SNB's Jordan added traction after he said the CHF cap exit is still far away, which saw it carve out 1.2185 highs. Good standing offers are in place from the 1.2200 region and should keep the recent trading range intact. USD-CHF is still finding support ahead of 0.9300 overnight and headed back to the 0.9350-60 region, where it traded for a large part of Monday's session.[USD, CAD]
USD-CAD was fairly flat during the Asian session close to 1.0160-70 just ahead of Monday's base. USD-CAD experienced a lively North American morning, with technical driven demand lifting it out of 1.0160 up to 1.0214 highs as short term accounts pushed to fill the post-jobs report "gap". Once this was achieved prices headed lower. Firmer stock and commodity prices were also a positive lead for CAD$ and it headed back to 1.0165-70. A further improvement could see support into 1.0150 probed, especially after it failed to sustain 1.0200 on Monday.