2013-03-28 21:12 (UTC)
XE Market Analysis
The dollar was mostly softer in pre-holiday, and pre-quarter end trade, though dealings were on the light side. EUR-USD maintained altitude above 1.2800, while USD-JPY slipped briefly under 94.00. There was little news from the EU, aside from the reopening of Cyprus banks (under capital controls), which was a net positive for the euro. The U.S. calendar revealed largely positive data, which allowed Wall Street to post modest gains.[EUR, USD]
EUR-USD consolidated slightly higher after weak short positions squared out ahead of the Easter break, which will affect many global centers. Some chop was seen in Asia as selling interest appeared around 1.2790, but a subsequent recovery from sub-1.2780 levels brought 1.2800 back into play during the N.Y. session. The pairing bounced over 1.2840 in light dealings, though decent resistance can be expected into 1.2850-59 (the latter point marking the current situation of the 200-day moving average).[USD, JPY]
The JPY held narrow ranges as new BoJ Governor Kuroda testified in the upper house of the Japanese parliament, where he affirmed his dovish credentials, saying that he will deliver "so as not to betray market expectations." However, he also said that he bankroll government spending. On net his remarks had little market impact. The BoJ meeting next week, on April 3rd-4th, will be a big focus as its the first for the new governor mega-dove governor, expected to unleash a new wave of asset purchases -- in the amount of "whatever it takes" to cure Japan's deflation problem. USD-JPY was heavy through the N.Y. session, though in tight ranges overall. It briefly dipped under 94.00, though returned to near 94.20 in late dealings[GBP, USD]
GBP-USD drifted slightly higher, in sympathy with the EUR-USD move and other dollar pairings, meeting resistance into and around 1.5175. The Gfk consumer confidence figure, released overnight U.K. time, came in a fraction above expectations at -26 in March, unchanged from the previous month. News that that minor-league rating agency Egan-Jones had downgraded its rating of the U.K. to AA- from A+ (following up its downgrade of last July, when it removed its triple-A rating) had little impact on sterling. Offsetting the negatives was a strong service output figure for January, which improves the chances that we'll see a positive Q1 GDP outcome. Bigger picture, the pound looks to have entered a broad consolidation phase after hitting major trend lows toward 1.4800 earlier in the month. The BoE's recent verbal interventions and expectations for a gradual improvement in the U.K. economy through 2013 have settled bearish appetite. Good demand can be expected into 1.5000. EUR-GBP hit a six-week low today of 0.8416 and has broken below both the 20- and 50-day moving averages in recent sessions. Support is marked at 0.8400, while 0.8450 marks resistance.[USD, CHF]
USD-CHF consolidated lower, trading to a 0.9512 low after logging a two-week peak of 0.9553 yesterday. Good support is marked at 0.9500-05, with the 0.9500 level and its environs having proven to be a pivot level over the last month. We expect the pair to enter a broad consolidation in the coming weeks, during which period a further retreat seems likely, toward the 200-day moving average at 0.9416. EUR-CHF has continued to treade a steady path near 1.2200.[USD, CAD]
USD-CAD briefly dipped under 1.0150 after the slightly better Canadian GDP outcome, though quickly popped back over 1.0160. The pairing remained firmly ensconced in a familiar range, moving between 1.0145 and 1.0175. With week, month, and quarter end in sight, activity slowed, and trade dried up quickly.