2013-04-11 07:31 (UTC)
XE Market Analysis
Risk appetite has weighed a touch on the USD and JPY in early Europe after a positive session for Asian stocks after yesterday's decent rally in Europe and the U.S. The European calendar is unlikely to provide anything ground breaking for intra-day traders, leaving the focus on underlying macro themes and performance in asset markets. The dollar firmed up after less dovish FOMC minutes, but stocks are still performing well, which is keeping demand for leverage positions elevated. EUR and GBP are still being supported dips, though sustained upside for both currencies may be compromised by weak growth. On an intra-day basis, EUR-USD's inability to sustain 1.3100 yesterday may signal sideways to lower action. Cable is still skewed for another test on resistance between 1.5350 and 1.5370. USD-JPY is hemmed by very strong two-way corporate flows, leaving the pair just short of the psychological 100.00 level and AUD-USD is still trading on a firm footing despite the much weaker than expected Australia employment number overnight.[EUR, USD]
EUR-USD movement was influenced by EUR-JPY. The corrective action via JPY fueled a move into 1.3045 before it turned back to 1.3070 over the course of the Asian afternoon. EUR-USD's inability to sustain higher levels on Wednesday reduced upward momentum and there may be a period of sideways to lower levels if the 1.3100-20 area holds today. Buyers are tipped into 1.3030 and there is good support into the 1.3000 region.[USD, JPY]
USD-JPY and the JPY crosses pressed higher at the Asia Pacific open, but once the Tokyo market got underway it spent most of the session on a corrective footing. USD-JPY turned away from 99.87 highs to trade back into 99.35, where it found Japanese buyers and drifted back over 99.50 ahead of the European open. Offers ahead of 100.00 remain heavy, with exporters and fund profit taking evident, though the depth of the correction leaves risk firmly on a move through 100.00 option structures and large stops above. EUR-JPY saw similar action and turned away from 130.50 to 129.70, but traded comfortably over 130.00 by the close.[GBP, USD]
Cable continues to mark time above 1.5300. The spectre of a triple dip recession has been reduced this week, which has provided a modicum of support, though flattish growth is hardly a reason to be cheerful for U.K. participants. It is looking likely that Q1 GDP growth will growth around 0.1% after this week's encouraging production numbers. NIESR also estimated that the economy grew 0.1% in March and revised up February's reading to 0.1%. Longs target another test of resistance between 1.5350 and 1.5370, which would open up a potential run on 1.5400 and February-20 highs of 1.5448 in due course.[USD, CHF]
EUR-CHF has registered modest gains since the 200-dma held at 1.2130 at Monday's Asian open. Local names used this level to establish long positions and have been rewarded with a move back over 1.2200 on Tuesday. The better EUR tone has been a supportive lead, but since the cross move through 1.2200 an overhang of offers into 1.2220 capped gains. These could keep ranges tight as bids lower down are raised to 1.2175-80. USD-CHF is looking more vulnerable and eyes a sustained move through 0.9300. Sell stops were tripped through 0.9300 on Wednesday, but backed up a touch as buyers were noted ahead of short term support from a series of lows from late February at 0.9275-80.[USD, CAD]
USD-CAD was quiet through the North American session on Wednesday, posting a trading range of 1.0140 to 1.0164. The CAD did not get much benefit from the firmer risk backdrop, while the lack of data on either side of the border tended to keep prices hemmed in as well. Bids are seen from 1.0130, while offers are in place from 1.0170.