2013-05-14 06:17 (UTC)
XE Market Analysis
The dollar was slightly softer in Asia on repositioning as stocks struggled due to profit taking. EUR-USD traded back over 1.3000 and Cable steadied in front of 1.5300 following Monday's sell off in thin trade, which was exacerbated by EUR-GBP demand and stops. USD-JPY also experienced a modest correction and extended to 101.35 after it started the session under 102.00, while AUD-USD headed back above 0.9980. There wasn't much to focus on for Asian participants. Economic data was on the light side and Japanese policy rhetoric was as-expected.[EUR, USD]
EUR-USD headed over 1.3000 versus the 1.2970 area in early Asia. Short term accounts pushed for stops on the topside following the lack of downside progress under 1.2950 overnight. Stops generated a move on 1.3025, but there were layered offers, which kept the topside in check, along with EUR-JPY selling pressure on upticks as JPY was also in correction mode. There was speculation that some funds could turn bullish EUR, but based on both USD and EUR speculative positioning some sort of correction was probably well overdue.[USD, JPY]
USD-JPY headed lower after it started the session under 102.00. Asian sovereign names were tipped a bit higher up, along with option flows, which encouraged Japanese corporate flows from the 101.80 region early on. There were brief flurries of fund demand, but it could not stop USD-JPY from moving through yesterday's lows to 101.35. A correction in global equity markets could force USD-JPY towards 101.00 and below as yen shorts reduce positions. The USD-JPY road higher is also expected to be a more difficult one in the coming weeks due to large option exposure that is rolling off between 102.50 and 103.00.[GBP, USD]
Cable steadied ahead of 1.5300 afer it tumbled to 1.5275 on stops in thin trade after yesterday's London close. News that the U.K. government will publish a draft bill today paving the way for an in/out referendum on EU membership by the end of 2017 didn't help sentiment and there was also technical related demand that went through EUR-GBP. Offshore names could still be inclined to build GBP long positions on dips amid expectations that this week's BoE Inflation Report could include an upward revision in growth. Note, however, that U.K. banks are still mostly short of GBP. On the downside, the April 25 base of 1.5265 should provide support for now.[USD, CHF]
EUR-CHF is steady close to the 1.2400 region. After a small correction from 1.2445 to the 1.2400 region buyers have stepped back into the cross. After last week's break to 1.2460 highs the underlying tone is still skewed to higher levels. It is possible that EUR-CHF will maintain this better tone until the next SNB meeting on June-21 after SNB policy speculation picked up last week amid disappointing inflation numbers. Topside hedging has been prevalent and this has effectively put a short term bottom in place from 1.2300 as market participants eye an eventual push back on 1.2500.[USD, CAD]
USD-CAD found support into 1.0080, after tripping stops under 1.0100 on Monday. Noted bids into 1.0070 provided support, while short covering, along with softer equity and commodity prices resulted in a move back over 1.0110. Offers are in place from 1.0130, and may put a cap on things until the North American open.