2013-01-17 21:01 (UTC)
XE Market Analysis
After being knocked down overnight, the dollar and yen stayed weak in N.Y. trade on Thursday. EUR-USD found support into 1.3330, and spent the afternoon moving up to 1.3375. USD-JPY made trend highs of 89.91, getting a boos from a story the BoJ would abandon its 0.1% rate target, and buy assets until inflation reached 2%. On the economic front, weekly jobless claims fell to five year lows, while housing starts surged, which gave equities a boost, weighing on the dollar at the same time. Friday's U.S. calendar is light, with just the preliminary January U. of Michigan sentiment survey on tap.[EUR, USD]
EUR-USD chipped away at offers from 1.3370 amid early interest out of N.Y. Short term buyers into the 1.3250 region maintained bias on the topside after the strong rally out of 1.3270 in early Europe. The pairing peaked near 1.3380 in early dealings, before slipping back under 1.3335 on profit taking. The 30 level held up however, and as stocks advanced through the afternoon, EUR-USD marched back up over 1.3385.[USD, JPY]
USD-JPY was on the rise through the session, as Japanese officials put on a united front on FX policy after the conflicting messages earlier this week. The pairing opened neat 89.20, making its way to 89.60. Later, talk the BoJ may scrap its 0.1% interest rate floor and potentially pledge open-ended asset purchases until inflation reaches 2% at next week's meeting, weighed on the yen further. Though a variant of previous plans floated, it renewed focus on Japan's reflation kick and would come on top of expected plans to top up asset purchases by another Y10 tln. Yet USD-JPY jumped to test 90.00 again before stalling after marking fresh trend highs of 89.91.[GBP, USD]
Cable crashed to session lows on large Swiss name selling that started from 1.6020 and accelerated through 1.5980 and 1.5970 to trip stops into the 1.5955 region. Short term specs were also active in EUR-GBP and extinguished a large 0.8350 knock out option to reach trend highs over 0.8360. Cable ran into natural buyers into 1.5950 and 1.5930, but tech funds have the 200-dma in their sight just in front of 1.5900. EUR-GBP longs eye resistance into the 0.8400 level.[USD, CHF]
EUR-CHF is on course to test 1.2500 after long term resistance gave way at 1.2475 to print its highest levels since the SNB put the lower limit in place at 1.2000. Macro funds were very heavy buyers of EUR-CHF from the European open. Interest initially went through Swiss names from 1.2370 and then a prime U.S. name bought a very sizeable amount, which set it on its way through 1.2400 and 1.2430. Thereafter, short term players were the main suspects, with tech funds and model types forcing the issue through 1.2450 barriers. N.Y. based accounts keyed off the bullish technical backdrop and bought dips into 1.2450 and successfully breached long-term resistance.[USD, CAD]
USD-CAD dipped toward 0.9845 from 0.9865 after the better U.S. data. The pairing had ventured over 0.9880 in London, though sellers were seen lined up over 80, resulting in a quick retreat. The usual story applies to the downside, with bids reported from 0.9830 to 0.9800. Stronger equities kept the pairing heavy through the afternoon, though it only managed lows of 0.9844 into the close.