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By XE Market Analysis August 20, 2019 3:03 pm
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    XE Market Analysis: Asia - Aug 20, 2019

    The Dollar was broadly lower in N.Y. trade on Tuesday, taking the DXY from 98.45 highs in early trade, to 98.13 lows into the close. Another dive in Treasury yields weighed on the Greenback, with market participants placing bets on a dovish set of FOMC minutes on Wednesday, and a just as dovish speech from Fed chair Powell at the Jackson Hole symposium on Friday. Wall Street was lower on the back of lower yields, as the fear factor set in. EUR-USD rallied from 1.1066 to 1.1107, while USD-JPY topped at 106.46, before falling back to 106.25. USD-CAD rallied to two-month highs of 1.3346, later falling back into support ahead of 1.3300. Cable meanwhile, rose to near two-week highs of 1.2179.

    [EUR, USD]
    EUR-USD bounced to 1.1107 highs on a short covering move, after failing to make any downside progress under Friday's over two-week low of 1.1066, along with another Treasury yield lurch lower.. The pairing looks to be consolidating losses seen over the past week or so, and with sell-stops now said to be building around the 1.1050 level, a downside break is looking more likely. Not as dovish as expected FOMC minutes on Wednesday could save Euro bulls for now, though with the ECB primed to ease further, Germany poised for fiscal stimulus, the unknown impact of Brexit, and the political crisis in Italy, EUR-USD looks set to test the 27-month low of 1.1027 seen on August 1.

    [USD, JPY]
    USD-JPY dipped to 106.16 in early N.Y. trade, later peaking at 106.46 session highs. The partial reversal of early Wall Street losses drove the very modest rally. The pairing continues to be sensitive to risk levels, and recent Market volatility has limited gains and losses over the past couple of weeks. The 105.00 to 107.00 levels have been the lines in the sand over this period, and until some clarity on trade and global growth is seen, range trade mentality will likely continue to be in vogue.

    [GBP, USD]
    Cable rallied to near 1.2180 after printing a three-session low at 1.2064 into the N.Y. open. The pairing managed to trade over its 20-day moving average (1.2170) for the first time since July 1. Today's developments included a resounding EU rejection of UK Prime Minister Boris Johnson's Irish border proposals, and a reaffirmation by Boris of his no-deal-and-I-mean-it threat if the EU does not change its position -- both highly predictable occurrences. The lack of sustained selling of the pound at these bearish prompts adds to recent signs that the pound has reached an equilibrium of sorts following a multi-month period of underperformance. Market participants are now anticipating what is shaping up to be a phase of high Brexit drama, which will commence when parliament returns from summer recess on September 3.

    [USD, CHF]
    EUR-CHF stemmed its recent bleeding in N.Y. on Friday, as the CHF was sold off modestly on the back of the return to risk-on conditions. Thursday marked the lowest seen since mid-June of 2017. From here, upside price action may be limited, as the ECB is on course for additional monetary stimulus in September, perhaps more aggressively than initially thought, and the likelihood for further risk aversion in global markets remains high. This said, another risk-on session Monday saw the cross top at 1.0896, a four-session high.

    [USD, CAD]
    USD-CAD rallied from session lows of 1.3313 early on, as WTI crude fell $1/bbl to $55.20, and as Canada manufacturing data came in on the soft side. The pairing topped at 1.3346, a two-month high. USD-CAD later pulled back toward 1.3310 as oil recovered some lost ground. The 200-day moving average at 1.3305 becomes support now, after closing above the level on Monday. Resistance is the June 19 top of 1.3383.

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