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By XE Market Analysis August 10, 2017 3:17 pm
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    XE Market Analysis: Asia - Aug 10, 2017

    Risk-off remained front and center in N.Y. trade on Thursday, leaving the dollar mostly lower. Softer U.S. PPI data didn't help the greenback, which lost ground to the euro and yen, while making marginal gains against the CAD and pound. EUR-USD topped at 1.1772 from lows of 1.1718, as USD-JPY printed nearly two-month lows of 109.20, on the double whammy of geopolitical concerns and weaker U.S. yields and equity markets. USD-CAD moved to 1.1729 highs, as oil prices retreated from the $50 level. Cable bottomed at 1.2972, and generally remains in sell-the-rally mode. Developments in the U.S./North Korea spat will continue to drive dollar sentiment, especially USD-JPY, though Friday's U.S. CPI report may have some impact as well.

    [EUR, USD]
    EUR-USD bounced to 1.1748 highs after the cool U.S. PPI data, before falling back to N.Y. session lows of 1.1718. From there, the pairing topped at 1.1762, and has since turned sideways near session highs. Bigger picture, euro gains appear to have stalled out from the rally which began in June, with selling into rallies remaining in order. The 1.1750 level looks to be a good place to short.

    [USD, JPY]
    USD-JPY hit fresh nearly two-month lows of 109.20, with sellers stepping in on the move under yesterday's trend low of 109.59. Safe-haven yen buying on the back of the N. Korea threat, and accompanying risk-off conditions continue to weigh on USD-JPY. The pairing moved under the June 5 low of 109.28, now bringing 109.00 region into focus.

    [GBP, USD]
    Cable traded on either side of 1.3000 in morning U.S. dealings, before pulling back toward 1.2970. We remain bearish of sterling. The latest Reuters poll found a strong consensus among 70 analysts for the BoE to leave monetary policy on hold until 2019, and found that the consensus view was for UK growth to continue to lag Eurozone growth, with risk of recession pegged at 20% for the coming year.

    [USD, CHF]
    EUR-CHF picked up back to around the 1.1350 level, after printing a two-week low at 1.1260 on Thursday. The flare-up in tensions between the U.S. and North Korea had sparked a mass of position trimming of franc shorts that had been recent established, with the Swiss currency itself showing it still retains some vestiges of being a safe haven, despite the SNB's best efforts to dismantle this in recent years. Assuming the Eurozone recovery remains on track, and should geopolitical tensions cool, we would continue to expect the franc to weaken.

    [USD, CAD]
    USD-CAD slipped early in the session as WTI crude briefly topped $50/bbl, taking the pairing to lows of 1.2673. Again unable to hold the key level, oil prices have since fallen to lows of $48.58, resulting in renewed USD-CAD buying, and a session high of 1.2729. The pairing has stayed under the overnight, near one-month high of 1.2734, and we continue to see a sell-the-rally strategy, given the hawkish BoC backdrop.

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