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By XE Market Analysis April 25, 2018 1:11 pm
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    XE Market Analysis: Asia - Apr 25, 2018

    The DXY posted three-plus month highs of 91.24 in N.Y. trade on Wednesday, largely driven by higher Treasury yields. There was no data to move the markets, though Wall Street was lower once again, despite mostly solid incoming earnings reports. EUR-USD touched trend lows of 1.2168, while USD-JPY topped at two-plus month highs of109.38. USD-CAD peaked at 1.2898, while cable remained near recent lows, bottining at 1.3925.

    [EUR, USD]
    EUR-USD posted eight-week lows of 1.2168, with the move largely driven by the surge in U.S. yields, along with Fed tightening prospects, and sign of a growth slowdown in Europe. A key EUR-USD level to the downside is 1.2154, which marks the March 1 low point of the broadly sideways range that's been play for nearly three months now.

    [USD, JPY]
    USD-JPY printed fresh two-plus month highs of 109.38, with gains coming on the back of the surge in U.S. yields. The pairing has posted six-straight days of higher daily highs, with the next major upside target being the 200-day moving average at 110.28. USD-JPY has not traded over its 200-day since January 10.

    [GBP, USD]
    Cable has remained heavy but above the week's low, seen on Monday at 1.3917, contrasting to the fresh trend lows EUR-USD has seen. We anticipate the pair will trade steady-to-lower into the May 10th BoE monetary policy decision. The BoE will also be publishing its latest quarterly inflation report, with updated inflation and growth forecasts, where we expect a downward nudge in the CPI prognosis.

    [USD, CHF]
    EUR-CHF continued to consolidate recent gains. This is the fourth consecutive week, and the sixth out of the last eight weeks EUR-CHF has rallied, and the cross is now over 12.5% higher from the levels of mid last year. The franc has been driven lower by the -0.75% Swiss deposit rate along with the widespread expectation for the SNB to remain strongly committed to negative interest rates until after the ECB starts tightening. The central bank's chairman, Jordan, said in an interview with the La Liberte newspaper this week that "it is not yet time to change monetary policy," adding that "we do not want to provoke an appreciation of the Swiss franc."

    [USD, CAD]
    USD-CAD printed three-week highs of 1.2898 into the North American open, and most recently, has been supported by WTI crude weakness. Option backed offers are said to be in place at 1.2900, with the next resistance level being the April 3 top of 1.2925. Big picture, cooler Canada CPI, and lowered growth prospects, along with a cautious BoC should overall keep USD-CAD supported.

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