2013-04-11 10:50 (UTC)
XE Market Analysis
The USD and JPY responded to a decent rally across global equity markets. The standout flows went through JPY once again. EUR, GBP and AUD were well supported on Tokyo backed bids via the JPY crosses. EUR-USD broke back above 1.3100 and extended through 1.3120 after EUR-JPY traded to at new trend highs. There was a similar theme via GBP-JPY and AUD-JPY, which lifted Cable into 1.5400 and AUD-USD over 1.0575. The economic data calendar was quiet in Europe and in Asia data didn't really change the underlying macro theme. In the U.S. today jobless claims has the potential to generate more price chop due to the Fed's emphasis on developments in the labor market.[EUR, USD]
EUR-USD was boosted by Japanese demand for EUR-JPY, while the better global market risk backdrop also weighed on the dollar tone. After spending a large part of the morning just shy of 1.3100 it tripped buy stops on the way through 1.3100 and 1.3130 as EUR-JPY carved out new trend highs over 130.70. EUR longs are still just in control, but yesterday's inability to sustain higher levels is a warning and a lack of further upside today could signal sideways to lower action ahead. The 1.3150-65 region is a major pivot point for the medium term. The 1.3150 area is where medium term moving averages lie and above are highs from late February.[USD, JPY]
USD-JPY experienced heavy two way flows, leaving it confined to a narrow trading range. Since European markets open activity picked up significantly in USD-JPY. Japanese importer were heavy dollar buyers and specs were front running retail interest via the crosses out of Tokyo. USD-JPY is little changed around 99.50 after it met very strong yen demand via U.S. names around the 95.75 region. One account sold well over a yard of dollars and another name reported massive yen demand, but it barely registered on the chart given the appetite to sell yen. This could leave specs exposed if there is any dollar fallout later in the session.[GBP, USD]
Cable cleared near-term resistance at 1.5350 and 1.5370 on dollar selling and GBP-JPY gains. It broke the top of the range to reach new trend highs around 153.40. Yen selling is the main takeaway since late Asia as the crosses take up the slack as USD-JPY is tied up by increasing two-way hedging pressure. Cable stops generated momentum and the technical backdrop fueled a test of offers from 1.5400. February-20 highs around 1.5450 are a potential target in the coming sessions if risk appetite holds up.[USD, CHF]
USD-CHF broke back below 0.9300 as dollar selling accelerated ahead of the N.Y. open. It headed into support from late February at 0.9270-80 after yesterday's lows at 0.9295 gave way. A break of February-28 lows of 0.9280 could see order book bids at 0.9250 threatened and previous lows around 0.9230-35. Although this will be dependent on EUR-USD's ability to sustain higher levels as it nears strong resistance into the 1.3150 region.[USD, CAD]
USD-CAD broke the bottom of the recent range as CAD$ rallied sharply in line with heavy demand for the commodity bloc currencies from fund names and Japanese demand via the crosses. The USD-CAD move under 1.0100 is very bearish signal and there is likely to be accelerated selling pressure out of North America. However, it is worth bearing in mind that the outlook will be highly dependent on the risk backdrop. Should oil prices fall away on today's bearish forecast from IEA there could be scope for some USD-CAD bargain hunting at current levels. On the daily chart there are support levels between 1.0080 and 1.0050 that should attract buyers.