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By XE Market Analysis August 7, 2018 2:20 pm
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    XE Market Analysis: Asia - Aug 07, 2018

    The Dollar was on a softer footing early in the N.Y. session on Tuesday, though managed a modest recovery through the morning session. The DXY bottomed at 95.00 early, before recovering to 95.18 highs in relatively light dealings. There was no top tier data to drive the FX market. EUR-USD peaked at 1.1608, then pulled back to a low of 1.1586 at mid-morning. USD-JPY based at 111.00 before climbing to 111.27 into the London close. USD-CAD fell to 129.63 ahead of the open, though later recovered to 1.3043 highs as oil prices headed lower. Cable found buyers ahead of Monday's 11-month low of 1.2919, later topping at 1.2961.

    [EUR, USD]
    EUR-USD struggled to hold the 1.1600 handle, peaking under 1.1610 on a few occasions before being pushed back into the 1.15690 region. European names have reportedly been the sellers of note over the figure. Monday's low of 1.1527 is now support, with resistance up at 1.1611, which was Friday's high.

    [USD, JPY]
    USD-JPY has printed one-week lows of 111.00, down from overnight highs of 111.37. The move lower comes despite the relatively risk-on backdrop, though firmer JGB yields may be supporting the yen. The 1-year topped 0.10% again overnight, after softening on Monday. The July 311 low of 110.88 is the first support level under the 111.00 mark

    [GBP, USD]
    Cable recovered above 1.2950 after printing a fresh 11-month low at 1.2920 Monday in what is now the fifth consecutive week of declines. The most recent losses reflect a market asking for a bigger Brexit discount in Sterling, which we estimate to have been 10-15% in trade-weighted terms since the vote to leave the EU in June 2016. The discount took another ratchet after a senior government member said over the weekend that the odds for a no-deal Brexit are now higher than the odds are for achieving a new deal.

    [USD, CHF]
    EUR-CHF has remained heavy, printing a six-week low of 1.1498, extending a decline that was started by the dovish-tilting policy guidance of ECB President Draghi in July. The low is the nadir of a retreat from the two-month high that was posted in mid July at 1.1714. This cross still remains in a broadly sideways range that's been evolving since late May, which is a similar pattern that EUR-USD has been seeing.

    [USD, CAD]
    USD-CAD traded to nearly two-month lows of 1.2963, with sellers taking the upper hand as crude oil prices remain firm, and as the market holds out hope for a NAFTA agreement, at least in principle, by the end of August. The July Ivey PMI report saw the seasonally adjusted measure slip to 61.8 from 63.1.

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