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By XE Market Analysis August 15, 2018 3:02 pm
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    XE Market Analysis: Asia - Aug 15, 2018

    The dollar index posted frosh near 14-month highs in N.Y. on Wednesday, topping at 96.98 before pulling back to 96.66 into the close. The Greenback rallied on safe-haven flows after Turkey imposed tariffs on U.S. goods, which saw equities and Treasury yields fall. The Euro in particular, was driven by movements in the Turkish Lira, which was extremely volatile through the session, taking EUR-USD to trend lows of 1.1301 as the Lira dropped, then back up to 1.1355 highs as reports of foreign investment into Turkey lifted the Lira. USD-JPY remained soft, as the risk-sensitive Yen remained fir. The pairing fell to 110.44 before recovering some. USD-CAD rallied to 1.3175 highs as WTI crude skidded to eight-week lows of $64.52. Cable printed new trend lows of 1.2662.

    [EUR, USD]
    EUR-USD found buyers into the 1.1300 level, bottoming at 1.1301, a 14-month low, before bouncing over 1.1310. Today marks the fifth consecutive session of lower daily highs and lows for the Euro, a bearish indicator. The pairing later topped at 1.1355, as the Turkish Lira rallied on reports that Qatar would invest %15 bln in Turkey. Profit taking may be in order for the near term, though given risk-off conditions, and room for further fallout in Turkey, Euro losses may not be done with quite yet.

    [USD, JPY]
    USD-JPY has recovered modestly form its 110.44 lows, popping to 110.67 highs, likely as the risk-sensitive Yen reacts to a decent Turkish Lira rally. USD-TRY has fallen to 5.864 from 6.178 at the N.Y. open, a 5% move. EUR-USD has rallied to 1.1340 from lows of 1.1301 earlier.

    [GBP, USD]
    Cable pegged a fresh 14-month low at 1.2662 in N.Y. trade. The pair has now fallen in nine of the last eleven sessions in what is the sixth consecutive week of declines, rendering market participants unwilling to sit on long positions for fear of being sliced by the falling knife. UK foreign secretary Jeremy Hunt became the latest senior government member to express concern that a Brexit deal with the EU may not be reached, while there is a palpable chance that there will be a leadership challenge on Prime Minister May in the coming weeks. As a result, we expect the pound to remain heavy.

    [USD, CHF]
    EUR-CHF added to recent losses late in the N.Y. session as EUR-USD slid to new trend lows, trading to near one-year lows of 1.1244. The Euro was again beaten down on EU bank exposure to Turkey, while at the same time the Franc remained relatively bid on the back of safe-haven flows.

    [USD, CAD]
    USD-CAD opened near 1.3100 before making its way to 1.3140 into the U.S. EIA oil inventory data, which revealed a large 6.7 mln bbl build, versus expectations for a 2.5 mln bbl draw. This saw WTI crude prices tumble to eight week lows, taking USD-CAD to near highs of the week at 1.3175. General risk-off conditions did not help the CAD either.

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