2013-04-26 10:42 (UTC)
XE Market Analysis
It was a quiet European morning. The dollar edged higher as equity markets in Europe traded on an easier footing ahead of U.S. Q1 GDP data, which left the EUR suspended over 1.3000, while Cable pulled back from yesterday's 1.5480 peak. EUR-CHF chopped between 1.2275 and 1.2310 after SNB's Jordan warned that it was prepared to take further measures on the CHF at anytime, but the rest of his remarks did not live up to the hype and EUR-CHF longs took profit over 1.2300. JPY was firmer overall after the BoJ left policy unchanged in Asia, which was widely expected. It reiterated that it would expand the monetary base by Y60-70 tln annually. Today's influence is likely to come from the U.S., where Q1 advanced GDP is due, along with consumer sentiment.[EUR, USD]
EUR-USD drifted into the 1.3000 region after offers at 1.3050 capped in early trade. The dollar edged higher as European stocks headed lower, but overall interest was relatively low since the Asian session. Expectations of Asian central bank bids limited downside potential, while this week's pick up in ECB rate cut expectations is still keeping the pair under 1.3100. Option expiries are noted at 1.3000, 1.3050 and 1.3100 for today's N.Y., which should reduce activity into the European afternoon. However, U.S. advanced GDP is likely to drive price action into the weekend. Outstanding orders include support from 1.2880 to 1.2850 and bigger offers are noted from 1.3080 to 1.3100.[USD, JPY]
USD-JPY found support after it dropped to 98.22 in late Asia after the BoJ left policy unchanged, which was in line with expectations. It edged back over 98.50 and briefly traded into the 98.85 region since the European open. BoJ Governor Kuroda said that the decision was unanimous and there was no talk that further easing would be needed now. Kuroda said it will continue to ease until the 2% CPI target is reached. Meanwhile, PM adviser Honda said the BoJ will ease further if the price target isn't met. USD-JPY price action looks consolidative after the BoJ failed to provide a fresh trigger for yen shorts. The market is already running excessive short positions and more sideway price chop may continue due to an overhang of large 100 option structure and also the near-term Golden Week holidays.[GBP, USD]
Cable consolidated under Thursday's 1.5480 peak. Option related offers put a top in place and it did not trade better than 1.5472 highs in Asia. Outstanding barriers at 1.5500 are related to a 1.5000-1.5500 range binary position and could keep ranges tight in the near-term. However, yesterday's surge from 1.5300 to 1.5480 should fuel good demand on dips. There were reports of several longer term bears cutting positions and more dip buying is tipped at 1.5400-20 and 1.5380 in the near-term.[USD, CHF]
EUR-CHF moved out of support at 1.2275 and traded into 1.2310 after SNB's Jordan said it was prepared to take further measures on the CHF at anytime. The rest of his remarks did not live up the opening warning and EUR-CHF headed back to 1.2280. Jordan justified the CHF cap based on substantial downside risks and said it would enforce it with utmost determination. However, the remarks did not suggest that the SNB was about to shift the lower limit as market participants had speculated over the course of the week. Meanwhile. a better than expected Swiss KOF leading indicator only had a muted impact.[USD, CAD]
USD-CAD is trading close to 1.0200 after it finally managed to move under the 1.0200 mark on Thursday, posting a low near 1.0185. Stops were a factor at the figure, and a Canadian name reportedly was a good seller from 1.0210. Downside is contained by corporate demand though after yesterday was the first time on the 1.01 handle since April 12. Bids are noted in size into 1.0180. Offers are now likely from 1.0230-40, where support was previously noted.