2013-04-09 10:27 (UTC)
XE Market Analysis
The European morning saw a small correction from overnight moves, but overall the USD consolidated at softer levels as stock markets posted modest gains. USD-JPY reached a new trend high around 99.65 overnight but corrected back below 99.00 on heavy option related selling and profit taking. This weighed on EUR early on, but European accounts kept EUR-USD supported ahead of 1.3000. Cable headed back over 1.5300 after a rebound in U.K. production data. RBA took off from 1.0425 to 1.0468 highs after RBA's Edwards said high AUD doesn't require a policy response as the economy is coping better than expected. In Asia, regional sentiment was boosted by a slower than expected China CPI.[EUR, USD]
EUR-USD was supported overall ahead of 1.3000. Most of the early action was influenced by a EUR-JPY correction from just ahead of 130.00 barriers in Asia. It headed from 129.50 to 128.40 after the European open on macro fund profit taking. EUR-USD also saw some supply of its own from an Asian central bank that sold in the 1.3050s after large offers from 1.3080 remained intact overnight. The pullback to 1.3005 ran into European account demand. Short term traders are still keying off the more positive technical backdrop, which came after the EUR rebound over last week's ECB monetary policy meeting and also the recent run of slightly disappointing U.S. releases.[USD, JPY]
USD-JPY corrected after hitting new highs in Asia. It headed to 99.65 on more yen selling by Japanese importers and funds looking to put their money to work in USD, EUR, GBP and AUD. However, long standing option positions fueled good selling and exporters also capitalised on recent yen weakness. A Japanese agricultural name had a very large offer above 99.70, according to sources, while very large expiries at 99.00 and 99.25 today, along with 100.00 barriers also weighed. The pullback extended from 99.25 to 98.70 after the European open, but there was also good demand on dips, leaving the pair close to 99.00. Longs are heavily positioned for a 100 print at some point this week.[GBP, USD]
Cable cleared 1.5300 after better than expected U.K. February production data. The rebound in February will add to expectations that overall the U.K. probably managed to avoid a triple-dip recession and helped Cable up from earlier lows of 1.5250. The short term technical picture rolled over at the London close on Monday after weak longs were stopped out on the move from 1.5300 back to Friday's consolidation zone at 1.5240. BoE's Fisher said he sees a need for more easing in a report being covered by Dow Jones. However, he maintained that FLS will support a pick up in lending and sees a glimmer of hope for the U.K. economy. Elsewhere, the U.K. trade deficit widened in February as exports fell despite the fall in the value of pound from the start of the year.[USD, CHF]
EUR-CHF has registered modest gains since the 200-dma held at 1.2130 at Monday's Asian open. Local names have used this level to establish long positions and were rewarded with a move back over 1.2180 today. The better risk backdrop and improved EUR tone cleared away short term offers, though the 1.2200 region is still congested with decent order flow and movement was choppy through this level today. SNB's Jordan maintained that the SNB is a long way from exiting from the CHF cap, which is not unexpected given the uncertainty that is still evident in the eurozone. Swiss data was mixed. The CPI reading missed expectations at -0.6% and highlighted the importance of the CHF cap to limit deflation risks. Meanwhile, Swiss retail sales came in at 2.4% y/y from 1.9% previously. USD-CHF has settled around the 0.9350-60 region after another failed attempt overnight to fill support from 0.9300-10. Offers are tipped from 0.9370 and ahead of 0.9400.[USD, CAD]
USD-CAD was fairly flat overnight close to 1.0160 just ahead of Monday's base. USD-CAD experienced a lively North American morning session on Monday, with technical driven demand lifting it out of 1.0160 up to 1.0214 highs as short term accounts pushed to fill the post-jobs report "gap". Once this was achieved prices headed lower. Firmer stock and commodity prices were also a positive lead for CAD$ and it headed back to 1.0165-70. A further improvement could see support into 1.0150 probed, especially after it failed to sustain 1.0200 on Monday.