2013-03-15 17:50 (UTC)
XE Market Analysis
The dollar gave up a little more ground overall in N.Y. trade on Friday, though activity was relatively light into the weekend. The U.S. data slate was fairly busy, and results were generally positive for the U.S. fundamental outlook. CPI was a bit warmer than forecast, while the Empire State index bear the street. Industrial production firmed up, though the U. of Michigan sentiment survey was considerably weaker than thought. EUR-USD moved over 1.3100 briefly, before putting in a base near 1.3050. USD-JPY lost some ground to near 95.25 with "sell the fact" activity taking place after the new BoJ officials were confirmed by Japan's upper house. Cable ramped up to two-week highs over 1.5175 after the BoE governor said the Bank was not looking to push sterling lower.[EUR, USD]
After opening near 1.3060 in N.Y., EUR-USD spiked to 1.3107 highs in the aftermath of the U.S. CPI report. Stops were a factor on the move over 1.3075, though pre-weekend selling emerged quickly over the figure. EUR-USD added to Thursday's gains as European accounts covered shorts. Offers between 1.3030 and 1.3050 were filled and light stop loss activity carried it to the 1.3070 area. Dollar buyers suffered from exhaustion on Thursday and booked profit, which was the catalyst for a decent squeeze from the 1.2910 area.[USD, JPY]
The JPY added to gains on stop loss activity. USD-JPY saw good U.S. account interest through 95.50 and fueled a marked pick up in order flow to force lows under95.20. EUR-JPY also saw some messy price action after 124.80 gave way, which was reportedly a level for some London names, and it traded to under 124.30 lows. It looks like follow through dollar selling out of N.Y since the open set the tone for USD-JPY traders after a fairly muted reaction to the upper house approval of the three BoJ nominees in Asia.[GBP, USD]
Cable extended just over 1.5175 following the U.S. data, which were fresh 10-day highs. Offers related to large 1.5150 expiries capped further gains. Looking ahead, Monday's large 1.5100 strikes were influential yesterday, but yesterday's supportive comments from BoE Governor King may negate fresh sterling sales. On the Cable topside March-5 highs at 1.5200 is a near-term pivot and could shift the long-term outlook if broken. Next week will be a key week for sterling with the BoE minutes and the Budget due.[USD, CHF]
EUR-CHF was also pressured by stops after 1.2300 gave way for the first time since March-6. EUR-USD's inability to sustain earlier highs offered some supply, though the standout influence has been the USD-CHF correction since it topped out at trend highs over 0.9565 on Thursday. EUR-CHF is trading around levels where natural buyers emerged early on in March and the downside could slow early next week. A U.S. account was reportedly a good seller on the way down to force through stops between 1.2300 and 1.2280.[USD, CAD]
USD-CAD dipped under the 1.0200 mark in early North American trade, as the greenback continued to unwind its sharp gains seen over the past week or so. Corporate buying interest from the figure and below slowed the pace of further USD-CAD losses, while mixed U.S. data releases brought short covering to bear in subsequent trade. Interim support was seen at 1.0180, and ultimately held. The pairing based at 1.0181 before rebounding to 1.0225.