Market Analysis: 6th Nov 2015 – XE

XE – The dollar soared after the much better payroll headlines, taking EUR-USD to better than six-month lows of 1.0706 from 1.0840 ahead of the data. USD-JPY initially posted 2.5 month highs of 123.03, up from 121.90, then later touched a 123.26 peak. Yields snapped higher, as equity futures dropped on good news is bad news thinking. Stocks later recovered to mixed on the session, while yields remained firm. USD-CAD rallied, despite a strong Canadian jobs report, as oil and gold prices were hit by the broadly strong greenback. The pairing rallied to 1.3317, a better than one-month high. Cable slid to 1.5027 from 1.5150, levels last seen in April. There was little dollar retracement into the close, indicating more USD gains may be in the cards.

[EUR, USD]
EUR-USD opened the session near 1.0880, and made a bee-line for session and more than six-month lows of 1.0706 immediately following the U.S. jobs report. The found buyers ahead of the 1.0700 level, though was then capped at 1.0750. The pairing has shed just over 3% since Monday, when it peaked at 1.1052. The market may take another crack at the 1.06 handle on Monday, though given the scope of euro losses seen this week, short covering into the weekend provided some support. Under 1.0700, the April 23 low of 1.0666 will come into focus.

[USD, JPY]
USD-JPY screamed up over 123.00 after the jobs report, where it reportedly ran into a wall of offers over the figure. The pairing peaked at 123.08 before falling back under 122.70 early in the session. Firmed up Treasury yields, prospects for a Fed rate hike, and the BoJ’s divergent policy path however, kept downside limited. The dollar later topped at 123.26, and the August 23 high of 123.50 is the next upside target.

[GBP, USD]
Sterling remained under pressure on Friday, with the sub-forecast total production data following yesterday’s trimming of growth and inflation projections by the BoE. Dovish expressions from BoE Governor Carney are also in the mix, whose elevation of concerns about China’s impact on inflation have received fresh air from a Bloomberg interview. Cable logged a new low of 1.5027, levels last seen in April.

[USD, CHF]
USD-CHF posted eight month highs of 1.0076 after the U.S. jobs report, though the CHF outperformed the euro, as EUR-CHF tumbled 100 points to 1.0735. The cross later recovered, though with the Fed and ECB on divergent policy paths, the cross may well remain under pressure. Swiss inflation numbers earlier in the week backed expectations that a move from the ECB would likely be matched by the SNB, which is struggling to keep a lid on the currency. The CHF is down across the board today, as inflation remained steady at -1.4% y/y and core inflation moved further into negative territory.

[USD, CAD]
USD-CAD jumped to one-month highs of 1.3289 from 1.3210 after the twin U.S./Canada employment reports. Both sides of the border handily bear expectations, though the prospects of a December Fed rate hike, and a broadly higher greenback combined to drag USD-CAD up. In addition, crude oil prices fell back under $45/bbl, as gold was crushed to three-month lows, both CAD negative developments. USD-CAD later rallied over 1.3300 for the first time in over a month, topping at 1.3317. The broadly stronger post-jobs dollar weighed on WTI crude prices, which were down nearly 2.0% to $44.25 lows. The September 30 peak of 1.3331 is now in the crosshairs, though talk of option backed offers over the figure may slow advances for now.

 

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