2013-04-12 07:40 (UTC)
XE Market Analysis
Consolidation is the early theme after limited moves overnight. Equity markets were mixed and both Japan's Nikkei and JGB futures fell as the BoJ got its bond buying program underway. USD-JPY backed away from 100.00 once again as option related selling capped though equally any corrective action has been extremely shallow. USD-JPY may look to the U.S. for more potential upside, with movement now limited on BoJ rhetoric. Today's U.S. retail sales could be a mover and see another topside test. In Europe, EMU industrial production and U.K. construction output are due, but may not offer much potential for big market moves. Cable is supportive just shy of 1.5400 as large offers cap from 1.5425 ahead of technical resistance around 1.5450. EUR-USD longs are still hanging on, but very good resistance from 1.3145 to 1.3165 has marked the top of the recent range this week and consolidation could set on further topside failures. Meanwhile, eurogroup meets on Cyprus, Greece, Slovenia, and Portuguese maturity extensions.[EUR, USD]
EUR-USD came under a bit of pressure in early Asia and moved just under 1.3100 on EUR-JPY sales. However, fund demand and positive short term indicators lifted it back to 1.3125, where it consolidated into the European open. Longs are still positioned for extended gains, but it has struggled to clear away very good resistance from 1.3145 up to 1.3165 and further topside failures are likely to result in sideways to lower levels into the weekend. Support is tipped at 1.3050 and into 1.3030, while the psychological 1.3000 is likely to be a key turning point for position traders.[USD, JPY]
USD-JPY was weighed by profit taking after it traded at new trend highs of 99.95 during Thursday's N.Y. afternoon. Option related selling was prevalent from the 99.70-80 region in early trade, which fueled light selling by U.S. funds and it moved to 99.35 during the afternoon session. Specs continued to buy the dip, leaving it close to 99.50 as the European session got underway. There was no reaction from today's BoJ bond buying scheme, which got underway. If anything the market was already well positioned after yesterday's announcement and profit taking was noted in stocks, bonds and FX. More range bound action should continue early on, but today's U.S. data has the potential to fuel another topside test later in the session.[GBP, USD]
Cable ran into offers after it cleared the 1.5400 level on Thursday. Long profit taking is keeping a check on further gains and there is strong resistance from 1.5425 to 1.5450 also adding weight. The underlying technical backdrop has encouraged some short term buyers since late Asia, but lack of progress into 1.5400 and above may see longs turn positions ahead of the weekend. Natural demand should emerge into 1.5370 and 1.5350, while larger support lies ahead of 1.5300, which has held since Wednesday's N.Y. morning.[USD, CHF]
USD-CHF held steady as support from late February at 0.9270-80 put a floor in place on Thursday. Light dollar repositioning has fueled a move back over 0.9320. However, the underlying tone is still skewed to a potential downside test, which should fuel offers from 0.9340-50. Ahead of today's U.S. releases movement is likely to be contained and appetite to test the downside could be limited if risk appetite is compromised into the weekend.[USD, CAD]
USD-CAD consolidated close to 1.0100 following Thursday drop out of its recent trading range, which sent it to lows of 1.0083. Standing bids and offers had been lowered a couple of times over the past few days, indicating the big picture trend is to the downside. Buyers are reported at 1.0080, which signaled an interim bottom. On the daily chart there are support levels between 1.0080 and 1.0050 that should attract buyers.