2013-05-17 06:49 (UTC)
XE Market Analysis
The movers and shakers today in Asia were the AUD and NZD, both of which came under pressure. AUD-USD dove from the 0.9820-30 area to a low of 0.9736 before steadying around the 0.9760 area. The NZD saw a similar price action. The move looked incongruous next to mostly higher stock markets in Asia, but AUD selling reportedly came from a good variety of macro accounts and apparently pinned to ongoing talk of Fed tapering. EUR-USD, meanwhile, drifted lower on the coattails of the AUD-USD and NZD-USD moves and with with the USD maintaining a broad based bid on market sensitivity to the Fed QE tapering idea. The EUR managed to find a footing into 1.2850, though its rebound stalled shy of 1.2870. USD-JPY trade was uneventful into the European open, contrasting to a further extension higher in Japanese stock markets following much stronger than expected machinery orders data and reports that the government will be announcing measures to boost leasing to revive capital spending.[EUR, USD]
EUR-USD drifted lower on the coattails of the AUD-USD and NZD-USD moves and with with the USD maintaining a broad based bid on market sensitivity to Fed QE tapering talk. The EUR managed to find a footing into 1.2850, though its rebound stalled shy of 1.2870. EUR upticks towards technical resistance levels at 1.2900, 1.2930 and 1.2950 should meet selling pressure.[USD, JPY]
USD-JPY trade was uneventful into the European open, contrasting to a further extension higher in Japanese stock markets following much stronger than expected machinery orders data (+14.2% m/m for 2.4% y/y versus the market expectation for -4.9% y/y). The Nikkei newspaper reported that the government will be announcing measures to boost leasing to revive capital spending to levels not seen since the collapse of Lehman Brothers in 2008. The more bullish economic narrative that's evolving seems to have taken the shine out of the yen-funded carry trade play. Option barrier exposure from 103.00 is supplying the topside with significant offers and this is encouraging exporters and some funds to lock in current levels. JPY-cross movement was limited overall due to consolidation in the dollar pairing and a general lack of movement in EUR-USD.[GBP, USD]
Cable's downside should be underpinned into the weekend due to large outstanding option strikes at 1.5150. The market is long of strikes on the downside and option accounts have lifted Cable above 1.5200 this week. The U.K. calendar is quiet, leaving the impetus on repositioning and the risk backdrop.[USD, CHF]
The Swiss currency gave back most of the gains it saw in the wake of the net-weak U.S. data releases on Thursday, which had inspired a bout of CHF-supportive risk aversion. A rebound in Asian equities, led once again by Japan, following much stronger than expected machinery orders helped revive animal spirits, which served to weight on the CHF. EUR-CHF recovered to the 1.2450, which is about the mid-way point of what is looking like an emerging consolidation pattern after peaking at 1.2525 on Wednesday. Chart watchers are mindful that EUR-CHF was unable to sustain 1.2500 in January and long-term corporate hedging reportedly picked while the cross was above 1.2500 this week.[USD, CAD]
USD-CAD extended higher Friday, making a three-week peak of 1.0229. The CAD is showing the same price action as its dollar commodity bloc relations, the AUD and NZD, which as a group have come under pressure amid talk of Fed taper of its QE program. April highs were logged between 1.0278-1.0294, and this zone provides both technical targets and resistance levels. Good support can now be expected at 1.0200-1.0190.