2013-04-18 10:42 (UTC)
XE Market Analysis
Interest during the European morning was fairly low. Today's G20 meeting left many players sidelined, along with the mixed leads from equity markets. In Asia, stocks were lower, while European indices posted a broad recovery, which offered tentative support for risk taking. However, EUR was still hampered by yesterday bearish outside day fueled by heavy equity market losses and comments from ECB's Weidmann. Cable also threatened the downside after weak U.K. retail sales data, but recovered slightly on cross flows. JPY met selling pressure on upticks as sentiment improved, but USD-JPY ran out of steam ahead 98.50 for the second consecutive session.[EUR, USD]
EUR-USD moved inside a narrow range in low volume trade. European accounts threatened 1.3030 early on, where supportive bids were noted from Asian reserve management flows, which fueled a move back over 1.3050 and it extended to 1.3070-75 on EUR-JPY demand. Risk appetite improved since the European open, with stocks moderately higher after yesterday's weakness and subsequent losses in Asia. However, EUR bias is on lower levels following yesterday's correction from 1.3200, but the lack of downside movement could trigger a short squeeze after the N.Y. open if stocks were to add to gains. Position traders are expected to fade rallies towards 1.3070 and 1.3100. There are smaller option expiries around 1.3000 rolling off, but most of the more influential strikes lie under 1.2950.[USD, JPY]
JPY selling picked up as European stocks gained and nominal gold headed to $1399 highs. USD-JPY benefited from Japanese interest to buy dollars, which lifted it out of option strike territory at 98.00, while speculative flows increased in the JPY crosses. A EUR-JPY move out of 127.60 accelerated through light offers from 128.30 to 128.50, which fueled EUR-USD short covering over 1.2870 and helped Cable back over 1.5250. USD-JPY is closing in on offers from 98.50 to 98.70, which capped since Monday's Asian session. Into the N.Y. session comments from G20 leaders should come into focus and USD-JPY may begin to struggle to add to gains.[GBP, USD]
Cable dipped to session lows under 1.5520 after U.K. retail sales weakness. The number was slightly under expectations, which fueled the drop from 1.5240. However, good support at 1.5200, along with outstanding option expiries fueled an immediate recovery back to the 1.5235 region and it extended over 1.5250 on JPY cross demand. Yesterday's move below April-08 lows around 1.5240 should fuel further selling pressure on upticks, though with equity markets holding steadyappetite to add to positions is low. A move through 1.5200 is expected to trigger sell stops and could see a pick up in activity.[USD, CHF]
CHF was supportive in cautious trade. Equity markets were higher in Europe, but in the FX space there was limited interest to add speculative positions. EUR-CHF marked time close to 1.2150 after it could not overcome offers into 1.2165-70, while option related flows also tied prices up as the focus was on USD and EUR fluctuations. EUR-USD marked time close to 1.3050 which weighed a little on USD-CHF, leaving it just in front of 0.9300 versus yesterday's 0.9340 peak. The dollar pairing has potential to push back beyond early April highs around 0.9370 as intra-day accounts look to buy the dollar on dips based on positive hourly studies.[USD, CAD]
USD-CAD is trading deep inside the familiar trading range after the BoC policy announcement failed to force a break of range. It remained short of Wednesday's highs of 1.0295 in Asia despite equity market weakness and drifted lower into the European open. Over the European morning a pick up in European stocks fueled demand for the commodity bloc currencies and CAD$ headed back through the 1.0240 level. There is light support from 1.0230 and then very little until the 1.0200 level, which has held the downside for several sessions. The hourly chart has rolled over and pressure could remain on the downside in early North American trade. However, unless 1.0200 give way more rangebound trading looks likely.