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By XE Market Analysis April 25, 2019 2:55 pm
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    XE Market Analysis: Asia - Apr 25, 2019

    The Dollar retreated from near two-year highs in N.Y. on Thursday, getting a nudge to highs early following a stronger U.S. durable orders report. Gains were short lived however, as the market apparently decided to use the fresh high as a reason to book profits. The DXY fell from 98.32 to 98.03 lows by late morning. EUR-USD printed 1.1118 low, later rallying to 111.54. USD-JPY fell from 111.90 to two-week lows of 111.38, while USD-CAD dipped under 1.3490 from 1.3510 opening highs. Cable moved briefly over 1.2900 from pre-open lows of 1.2866.

    [EUR, USD]
    EUR-USD bounced from its trend low of 1.1118 seen after the early round of U.S. data, peaking at 111.54, before easing under 1.1135. The dollar generally turned lower through the morning session, appearing to be driven by a round of position squaring following earlier 2-year DXY highs. There was little impact from the ECB economic bulletin released overnight, which signaled risks remain to the downside, and underscoring the Bank will be "low for longer" with regards to interest rates. As a result, we expect the Euro to remain in sell-the-rally mode. The next downside target is at 1.1100.

    [USD, JPY]
    USD-JPY fell to two-week lows of 111.38 earlier in the session, about when Wall Street was at it worst levels. The pairing fell from the 2019 highs seen into the Wednesday close, and ahead of what was expected to be and was, a dovish BoJ announcement. USD-JPY has tried, and failed to hold the 112 mark for several weeks now, and may be entering a phase of shaking out some long positions, before being able to make fresh gains. Overall risk sentiment will be a determining factor going forward, though with the BoJ on hold, and a chance for further easing ahead, USD-JPY can be expected to eventually head higher.

    [GBP, USD]
    Cable was down for the seventh consecutive trading day, printing a new two-month low at 1.2866 after breaching London morning-session lows. The pairing later topped briefly over 1.2900 in N.Y. morning trade. The reprieve from Brexit anxieties continues. Parliament only on Tuesday returned from its two-week Easter recess, while Andrea Leadsom, the leader of the House of Commons, just announced the business schedule for next week without including a new Brexit vote. Focus will remain on talks between the government and the principal opposition, Labour, on forming a workable Brexit compromise.

    [USD, CHF]
    EUR-CHF's rally, which is in its fourth week, finally broke on Wednesday. The cross dove sharply from the mid 1.1400s to 1.1356 in N.Y. on Thursday in what was only the third down day since March 29 and the biggest daily drop since March 22. The catalyst was EUR-USD, which down to 22-month lows under 1.1120 following disappointing German Ifo sentiment and French business confidence data, which following last week's release of underwhelming preliminary April PMI survey data out of the Eurozone. EUR-CHF left a trend high at 1.1476, which is loftiest level seen since early November. The pronounced Swiss Franc underperformance had been accompanied by narratives talking about the market being in process of giving up on the Franc's role as a safe haven currency, which has been afflicted by the SNB's -0.75% deposit rate.

    [USD, CAD]
    USD-CAD attempted and failed to take out the post-BoC highs of 1.3520 posted on Wednesday, topping at 1.3516 in London morning trade. Since then, profit taking saw the pairing pull back under 1.3490, though with oil prices again on the decline, further USD-CAD downside will likely be limited. Support is now seen at 1.3480, though sell-stops are seen from 1.3475.

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