2013-04-04 06:47 (UTC)
XE Market Analysis
JPY plunged after the BoJ exceeded expectations, targeting an expansion of its monetary base and increased purchases of JGBs and longer duration. USD-JPY is now pushing its way up through 95.50 versus 92.90 prior to the BoJ decision. The magnitude of the USD-JPY rally has weighed a touch on EUR, GBP and AUD due to general dollar strength. The dollar had dipped on Wednesday amid disappointing U.S. data releases, while risk takers also got an added scare from the rising tension in the Korean Peninsula, which the U.S. Defense Secretary Hagel described as a real and clear danger. In Europe, JPY will continue to drive interest early on before market attention turns to BoE and ECB policy announcements. Both Banks are expected to maintain a steady policy hand. The ECB press conference is likely to grab more attention and it could open to the door for further easing.[EUR, USD]
EUR-USD is in a holding pattern ahead of the ECB policy announcement, where the bank is widely expected to hold out for now but could open the door to further measures in May or June even if on balance we still see a slightly higher chance that rates will remain on hold this year. There were, however, reports that the ECB is preparing measures to help ease financing conditions for SMEs, in line with Draghi's comments at the last press conference. Dovish sounding rhetoric from Draghi will see EUR-USD threaten recent lows around 1.2750. Sellers remain from the 1.2880 to 1.2900 region.[USD, JPY]
USD-JPY surged from 92.90 over 95.50 after the BoJ exceeded expectations. Having cleared out a number of key resistance levels there is likely to be see near-term supply ahead of the 96.00 region. However, longs are likely to target a move on previous trend highs of 96.71 in the coming sessions. Previous resistance at 95.00 and 94.80 could encourage short term buyers on any corrective action. Larger support is tipped at 94.00 now.[GBP, USD]
Cable is marking time just under 1.5100 after it was unable to sustain higher levels on Wednesday. Cable is still having a hard time rallying on its own steam after the recent construction and manufacturing PMI releases. Both numbers improved slightly from February, but were still under expectations. Today's services PMI is the more important number and is expected to ease slightly, but taken together with other data releases the U.K. should just about avoid a triple-dip recession, but it will be by a narrow margin. Near-term support is noted at 1.5075 and 1.5050. Offers have increased in recent sessions from the 1.5180 region.[USD, CHF]
USD-CHF traded back below 0.9450 overnight as the dollar came under pressure after slightly disappointing U.S. data ahead of Friday's key NFP release. USD-CHF's inability to clear previous highs around 0.9525 caught some accounts on the wrong side of the market, but having corrected overbought levels the balance of risk is still on higher levels and last week's highs around 0.9550. In today's session, movement will be heavily influenced by the ECB press announcement.[USD, CAD]
USD-CAD bumped a bit higher after the softer U.S. data on Wednesday and it has consolidated gains over 1.0150 in Asia. Bids from 1.0120 to 1.0100 have put a floor under the pairing in recent session, but there are still offers parked from 1.0170 that resulted in another session of range-trading. More of the same is likely, as markets brace for more policy announcements the ECB and BoE.