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By XE Market Analysis August 22, 2017 2:39 pm
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    XE Market Analysis: Asia - Aug 22, 2017

    The dollar firmed up some in N.Y. trade on Tuesday, leaving EUR-USD at session lows under 1.1850 into the close. USD-JPY meanwhile, topped 109.50, while cable printed one-month lows of 1.2812. USD-CAD bucked the trend, falling to two week lows of 1.2527 after better Canada retail sales volumes. Risk-on returned, with stocks aided by talk of progress on U.S. tax reform a major driver.

    [EUR, USD]
    EUR-USD has been quiet through the N.Y. session, idling between 1.1751 and 1.1771. A softer German ZEW outcome weighed on the euro, while it appears profit taking may continue to be a factor into Draghi's Jackson Hole speech later this week, with the FX market expected to discount the odds that the ECB chief makes a major policy statement on tapering.

    [USD, JPY]
    USD-JPY largely held overnight gains, printing 109.54 highs early in the session before settling in on either side of 109.40. The return of risk-on conditions has supported, as Wall Street puts in a solid performance today, and as Treasury yields edge higher. Still, N. Korea bubbles under the surface, as the U.S. and South Korea hold military drills, which will likely rein in dollar-yen bulls to a degree. The 110.00 mark would appear to be the upper threshold for now, with talk of Japanese exporter offers in place there recently heard.

    [GBP, USD]
    Cable remained heavy, ebbing back towards the earlier six-week low at 1.2811. The pound's lows today were seen subsequent to the release of a forecast-beating CBI industrial trends survey, which produced a fractional pop in the pound, while technical analysts have been highlighting Cable's breach below its 100-day moving average and a key 61.8% retracement level (at 1.2849) as bearish trend indications. We continue to take a bearish view with the Brexit process shaping up to be far from smooth, and detrimental to business and investment planning, while inflation-adjusted average household incomes are, and are likely to remain, in decline.

    [USD, CHF]
    EUR-CHF lifted to a four-session high at 1.1389, extending the recovery from last Friday's three-week low at 1.1259. We think the EUR-CHF cross faces some downside risk this week as we don't expect to ECB President Draghi to use the Jackson Hole venue as a place to lay the groundwork of QE tapering, seeing that the timing remains premature given tepid inflationary pressures and policymaker concerns about the strength of the euro. EUR-CHF resistance is at 1.1405-07.

    [USD, CAD]
    USD-CAD fell to its lowest since August 1, trading to 1.2527 from 1.2575 in the aftermath of the stronger ex-auto Canada retail sales. Sell stops were reportedly a factor at 1.2550-40 level, though corporate bids are rumored to be in place at 1.2500 now. The October BoC rate hike scenario was underpinned by the 0.5% gain in June retail sales volumes, which left a strong run of gains in every month this year.

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