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By XE Market Analysis August 21, 2017 3:08 pm
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    XE Market Analysis: Asia - Aug 21, 2017

    After trading largely sideways overnight, the dollar lost ground in N.Y. trade on Monday, leaving the DXY at one-week lows of 93.00. Risk-off conditions remained, see stocks and yields mostly lower. The was no U.S. data to drive markets to start the week. EUR-USD rallied to six-session highs of 1.1828, after opening at 1.1760, while USD-JPY remained above Friday's 108.60 low, but ran into resistance at 109.00. USD-CAD slipped to 1.2560, while cable reclaimed, and held the 1.2900 handle into the close.

    [EUR, USD]
    EUR-USD printed six-session highs of 1.1828, coming from near 1.1760 at the N.Y. open. Renewed speculation that ECB chief Draghi may announce the end of QE at this week's Jackson Hole symposium, appeared to be part of the driver behind the euro's move, though the greenback more broadly came under some pressure this morning, given continued risk-off conditions, led by ongoing U.S. political concerns.

    [USD, JPY]
    USD-JPY based at 108.64, just above Friday's four-month low of 108.60. The pairing had been under pressure from the usual risk-off conditions, though with Wall Street improving from earlier losses, the pairing has bounced to 108.91 highs into the London close. Near term gains are likely to be limited however, as the U.S. and South Korea hold military drills in the region, prompting Pyongyang to warn of a "merciless strike".

    [GBP, USD]
    The pound was up on the dollar, but down versus the euro today, though respective ranges from Friday have remained untested. Cable logged a high of 1.2916, and largetl holding the figure into the close. Slovenian PM Miro Cerar warned today that the Brexit negotiating process "will definitely take more time than we expected," and slammed the British government's paper on potential future customs arrangements as being "not realistic." Aside from Brexit, there remains a degree of political uncertainty following the June elections that left PM May's Conservative Party governing from a greatly weakened position..

    [USD, CHF]
    EUR-CHF lifted back to a 1.1379 high area after dipping to a 1.1321 low. The price action continues to track EUR-USD's ebb and flow, with the cross having made a return as a "normally" trading pairing over the last month. The euro logging a three-week low versus the franc at 1.1259 on Friday, which was seen after the ECB minutes to the August policy meeting revealed policymaker concern about the pace of recent euro gains. Assuming the Eurozone economic revival remains on track, which would help quell policymaker angst about euro gains, and assuming the ECB commits to QE policy tapering (there is some market speculation that this week's Jackson Hole policy symposium could provide Draghi with the ideal venue to make an announcement, although we think the timing is premature), we expect the EUR-CHF to recover to the SNB's former floor level at 1.2000.

    [USD, CAD]
    USD-CAD pulled back from opening levels just under 1.2600, basing at 1.2561 after the negative, but better than expected Canada June wholesale trade result. The pairing remained below its 20-day moving average of 1.2609 overnight, topping at 1.2607 in London. Friday's two-week low of 1.2557 provides the next support level.

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