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By XE Market Analysis August 9, 2018 2:53 pm
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    XE Market Analysis: Asia - Aug 09, 2018

    The Dollar index made its way to near highs of the week in N.Y. on Thursday, making its way to 95.48 late in the session from 95.16 early lows, despite cooler PPI data. Jobless claims were about in line with expectations. Wall Street was narrowly mixed, while Treasury yields slipped. EUR-USD fell to 1.1551 from 1.1600 highs. USD-JPY bottomed at 110.86, then bounced back over 111.00. USD-CAD recovered from 1.3020 to 1.3064 highs as oil prices stayed down. Cable recovered to 1.2907 early on, then fell to fresh one-year lows of 1.2835 after the London close.

    [EUR, USD]
    EUR-USD has made its way to session lows, after topping at 1.1600 following the benign U.S. PPI data. The pairing is expected to fall further given divergent Fed and ECB policies, along with slowing EU growth as compared to the U.S. fast pace. First support is Tuesday's 1.1547 low, followed by Monday's base of 1.1527.

    [USD, JPY]
    USD-JPY printed two-week lows of 110.71 in Asian dealings, before recovering to 111.18 into the N.Y. open. Since then, cooler CPI, lower Treasury yields, higher JGB yields, weak wholesale sales, and reports of large 111.00 strike expiries at the 10:00 EDT N.Y. options cut, saw the pairing fall back to 110.86 lows, despite a modestly firmer Wall Street. The pairing later recovered over 111.00.

    [GBP, USD]
    Cable printed a fresh one-year low at 1.2842, leter rallying over the 1.2910, before falling back under 1.2840 after the London close. The Pound has also posted fresh 10- and 11-month lows versus the Euro and Yen, respectively. In inflation-adjusted trade weighted terms the pound is now trading just over 15% below levels that were prevailing ahead of the vote to leave the EU in June 2016. Recent losses have reflected a growing concern that the fragile and divided British government won't be capable of hammering out a new agreement for a future relationship with the EU. Friday brings U.K. GDP data, along with production and trade figures.

    [USD, CHF]
    EUR-CHF made a two-month low of 1.1453 in N.Y. on Thursday which extended 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 has ranged between 1.3064 and 1.3020 through the session, quite a narrow range given recent volatility. WTI crude has remained at the bottom end of it six-week trading band, after sharp losses seen on Wednesday, which has been supportive of the pairing. Hopes for a NAFTA agreement by the end of the month will likely keep further gains limited. Of note, Friday brings Canada's July employment report, which is generally good for some volatility.

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