2013-05-08 07:10 (UTC)
XE Market Analysis
Sentiment is positive today after yesterday's positive close for U.S. stocks and encouraging China trade data, which came in on the firmer side and allayed some of the recent fears over the economic outlook. The dollar is easier, which underpinned EUR, GBP and AUD on dips. JPY is more consolidative after USD-JPY struggled to overcome good exporter hedging on Monday and Tuesday, which has been a thorn in the side for yen bears and eventually fueled more liquidation by USD-JPY longs held by offshore names. Today's European calendar sees German industrial production, which is forecast at -0.2% m/m. Swiss CPI should offer justification for SNB's policy stance, while the Norge Bank are expected to leave interest rates unchanged at 1.5%.[EUR, USD]
EUR-USD was supported by risk appetite after China trade beat expectations. It started the Asian session close to 1.3070 and headed back over 1.3100 by early Europe. Overall, it is still inside familiar ranges and there are a build up of two-way orders around current levels. Bids are supporting into the 1.3050 region and towards 1.3000, while offers remain from 1.3140 to 1.3160. However, it appears for now that after the recent ECB rate cut and the dovish rhetoric from Draghi that the euro remains in sell the rally mode.[USD, JPY]
USD-JPY experienced mixed flows in Asia after it was unable to clear 99.50 offers on Tuesday. There was early interest to reduce long positions, mainly from non-Japanese accounts, which forced 98.64 lows. Japanese bids kept interim support at 98.50-60 intact and it headed back over 99.00. Appetite to buy the JPY crosses helped the dollar pairing as the market responded to the better China trade data. However, momentum was fairly low on the way up and USD-JPY remained in close proximity to 99.00 after it met sellers around 99.15 highs.[GBP, USD]
Cable steadied around the 1.5450 region after stop loss selling took it under 1.5500 after Tuesday's N.Y. options cut. Longs are still in play at current levels and there are also likely to be more buyers towards pullback lows from April-26 at 1.5418. The underlying trend would shift though if 1.5400 gave way and longs that were built up after the U.K. GDP release on April-25 are likely to bail.[USD, CHF]
EUR-CHF consolidates around 1.2300 after it was unable to take out 1.2350 barriers on Tuesday. EUR-CHF was boosted by a marked pick up in topside strikes. Demand for strikes changed hands from two weeks out to one month from 1.2300 to 1.2500, which was a trigger for heavy local demand. However, there were good offers from 1.2340 and it triggered a pullback into 1.2300 by the N.Y. close. In Asia, it drifted just below 1.2300, where short term support kept it underpined. More local names bids are seen at 1.2270-80 today.[USD, CAD]
USD-CAD steadied close to the 1.0050 region. It met buyers ahead of 1.0035 after it took out large bids at 1.0050 in early North American trade. Buyers are note included CTAs and option types, which are likely to be defending outstanding barriers into the 1.0000-20 region. However, the improved risk backdrop, and noted offers from 1.0080 should leave the bias on lower levels.