2013-05-24 21:13 (UTC)
XE Market Analysis
Sentiment in the U.S. was more stable today after the Nikkei posted a late rebound on talk of price smoothing operations, and as the dollar picked up some ground in London on better EU data. Overall, markets remained nervous and the tone turned defensive into the N.Y. open, and ahead the long U.S. holiday weekend. U.S. durables were strong, and helped the dollar and stocks slightly, though Wall Street stayed close to flat though the session. EUR-USD remained inside a 1.2910 to 1.2940 band, while USD-JPY recovered over 101.20 from lows near 100.60.[EUR, USD]
EUR-USD headed to session highs close to 1.3000 after the German Ifo jumped in May. The EUR, which had started the session on a stable footing, moved up from the 1.2925 region. Gains were short lived once N.Y. entered the fray though, with the pairing easing back toward 1.2910 into the London close. Afternoon dealings were light, as many took off early in front of the long U.S. weekend.[USD, JPY]
USD-JPY remained stable in Europe. Stocks performed better after a difficult trading environment in Asia. The Nikkei ended the session 0.89% higher, with prices surging more than 4% in the last 30 minutes of trade amid speculation of official price keeping operations, though it had been more than 3.5% higher in the Tokyo morning. U.S. dealings saw the dollar give up the 101 handle, on its way to 100.66 lows. Japanese buying interest was touted at 100.50 however, and the dollar eventually moved back over 101.20.[GBP, USD]
Cable rose into the N.Y. options cut, where 1.5100 strikes matured. There was some added momentum after U.K. security sources played down the incident over British airspace, which resulted in a plane being diverted from Manchester airport to Stansted airport, which is close to London. A police spokesman said two men were arrested on suspicion of endangerment of an aircraft and were removed from the plane. Pakistan International Airlines said that Manchester air traffic control contacted the pilot after apparently receiving some information from the British security services. However, this may have been a precautionary move after the earlier terrorist incident in London this week. Cable is trading close to 1.5125 versus session highs around 1.5135, but the CHF and JPY maintain a bid tone as speculative trades were unwound into the weekend.[USD, CHF]
The CHF hit session highs against the EUR at 1.2430 and was supported close to 0.9610 against the USD as reports emerged on Sky News related to a plane incident over British airspace. The incident is not thought to be related to terrorism, according to U.K. security sources and should see the CHF back away from highs. However, apart from position squaring there is unlikely to be much more interest today after the heavy volumes that went through on Wednesday and Thursday. The London markets are closed on Monday and the U.S. is also out for a long weekend.[USD, CAD]
After opening near 1.0350, USD-CAD found support into the 1.0300 level, with bids at the figure putting a floor under the pairing. Trade was fairly quiet, though the CAD moved to its best levels as risk appetite stabilized. Early equity losses were largely wiped out, while oil prices recovered some. Some afternoon pre-weekend short covering lifted the pairing back over 1.0340, though it drifted back under 1.0320 into the close.