2013-05-06 19:27 (UTC)
XE Market Analysis
FX trade was generally light through the N.Y. session on Monday, though EUR-USD took a dip on the back of comments from the ECB's Draghi, who repeated that more easing my be in the cards. The euro fell to lows near 1.3055 after opening around 1.3120. There was no data to drive the market, and equities gave little guidance either, with Wall Street sticking close to flat through the day. Elsewhere, USD-JPY was slightly higher, while sterling was flat over 1.55, and USD-CHF a bit higher on the back of EUR-USD losses. Tuesday's U.S. calendar is empty as well, so another quiet session may be in store tomorrow.[EUR, USD]
EUR-USD based at 1.3055, after tripping stops at 1.3100. Draghi's reiteration that more easing may be in the cards weighed, and prompted weak longs out of their positions. Draghi also said rates were cut after the economic slowdown reached the core EU countries. The central bank head said "the macro-economic weakness has spread to parts of the euro area where so far the transmission of monetary policy has never been questioned". Option backed bids were noted from 1.3050, which provided support, though more stops are seen at 1.3040. The pairing edged off its lows in afternoon trade, ending up near 1.3080.[USD, JPY]
USD-JPY consolidated after Friday's surge from the 98.00 region. Activity was very low in Asia due to the Tokyo holiday. There was early demand from specs as stocks headed higher, but profit taking in EUR-JPY limited gains ahead of Friday's 99.26 highs. Overall the pair was sidelined. However, we think there is scope for further gains this week after the pick up in U.S. jobs. U.S. Treasury yields are underpinned, while the BoJ's policy stance should encourage buyers and another test of 100.00 looks likely. USD-JPY opened at 99.20 in N.Y., and managed a high just under 99.45, in very light trade.[GBP, USD]
Cable was a little easier in Europe, leaving it just ahead of the 1.5550 region. With the U.K. closed for a public holiday EUR-GBP's move up from 0.8415 to 0.8430 fueled a Cable move from 1.5585 into 1.5560. Overall, it remained supportive throughout after it traded back over 1.5600 on Friday. There was a notable pick up in demand after funds took advantage of a dip into 1.5480 after U.S. NFP data. GBP has been back in favor over the last week or so on improving forward looking economic data. Cable stuck to a 1.5525-45 range through the N.Y. session.[USD, CHF]
USD-CHF remained choppy over 0.9300 in light N.Y. trade on Monday. The pairing took at look at 0.9400 on the back of the quick EUR-USD slide, which was prompted by "further easing possible" comments from ECB chief Draghi. EUR-CHF dipped to 1.2260 from 1.2285, though activity was light.[USD, CAD]
USD-CAD pulled up just short of 1.0100 in early trade, where standing offers effectively capped gains. CTA buying interest was reportedly behind the modest rally, though it narrow ranges were again in fashion. Bids into 1.0050 provided enough support to keep downside contained as well, with the pairing drifting into the 1.0070 region before stabilizing.