2013-06-03 20:23 (UTC)
XE Market Analysis
The dollar came under broad selling pressure in N.Y. on Monday, with weaker U.S. data driving the unit lower. May manufacturing ISM came in below the 50 boom/bust line, and instantly took the greenback lower versus all major currencies. Later, another round of dollar sell stops hit the market, taking EUR-USD over 1.3100, and USD-JPY to 99.50. Wall Street was choppy, opening lower, though eventually posting gains in afternoon trade. The greenback stayed down though, ending the session near its lows of the day.[EUR, USD]
EUR-USD ramped up to near 1.3040 from lows around 1.2960 after the weaker U.S. ISM outcome. The pairing later peaked at 1.3110, levels last seen on May 9. The rally was driven by the weaker U.S. data, though solid buy-stops were a factor at 1.3045, just above the prior London high. Option backed selling was a factor on the 1.3100 handle, though buyers were quick to return under the figure.
EUR-JPY triggered stops through 130.00 on fund selling. The quick run lower from 130.30 eventually forced a low of 129.50 and left USD-JPY close to the 100.00 level early on, where strong Japanese bids emerged. Importers and option names were tipped overnight, though as the dollar came under broad pressure, stops at 100.00 and again at 99.50 gave way. The pairing bottomed near 98.85 before reclaiming the 99 handle.[GBP, USD]
Cable drifted back below 1.5250 in early N.Y. trade, though quickly ran up to 1.5375 after the weaker U.S. data. GBP may have scope for firmer levels this week if other forward looking PMI data picks up pace ahead of the BoE MPC meeting. The BoE are expected to leave policy unchanged this week ahead of July when Carney will take over as Governor from Mervyn King.[USD, CHF]
EUR-CHF traded on a firm footing after it regained its poise Friday, climbing out of the 1.2380 area and pushing back over 1.2480. However, apart from local names supporting under 1.2400 the large majority of flows via the CHF have gone through USD-CHF. As a result, the hammering the dollar took on Monday saw the cross fall back to 1.2330. USD-CHF dropped over 200 points to 0.9407. SNB's Jordan said on the weekend that the CHF remains strong despite the recent moves, which will reinforce expectations that policy will remain easy when the SNB meet on June-21. However, the pick up in domestic data is likely to rule out any measures to weaken the CHF further. EUR-CHF should remain a buy on dips, with near-term demand likely now into 1.2400-10. Offers are noted from 1.2480 to 1.2500.[USD, CAD]
USD-CAD gave back the 1.03 handle in North American trade, dipping initially on the back of the sub-50 U.S. ISM outcome, then adding to losses as the USD more broadly sold off. The pairing opened near 1.0345, and peaked at 1.0367 before tumbling to 1.0263 lows in afternoon dealings. Tuesday will bring April trade reports from both sides of the border, with USD-CAD generally showing reaction to the data.