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By XE Market Analysis August 26, 2019 3:13 pm
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    XE Market Analysis: Asia - Aug 26, 2019

    The Dollar was a little higher overall in N.Y. on Monday, taking the DXY to 98.08 highs from opening lows of 97.95. EUR-USD was steady through the morning, topping at 1.1124, later bottoming at 1.1097. USD-JPY USD-JPY peaked at 106.40 early on, later settling into a narrow range on either side of 106.00. USD-CAD was steady near 1.3300 through the morning, later sipping to the 1.3260 region. GBP-USD plied a narrow 1.2244 to 1.2207 range, with activity slowed due to a U.K. bank holiday. Trade angst remained front and center in N.Y. on Monday, following Trump's raising tariffs on Friday, escalating the trade war further. Tensions eased some on Monday, as both China and Trump made conciliatory noises over resuming negotiations. Wall Street moved higher as a result.

    [EUR, USD]
    EUR-USD fell from overnight highs of 1.1163, with the bulk of losses coming following weaker German Ifo data (weakest since 2012). The pairing opened the N.Y. session near 1.1120, later easing to a 1.1097 base. The poor EU growth outlook, the upcoming Brexit deadline, trade angst, and ECB easing potential should continue to conspire against the Euro going forward. Support is at Friday's near one-month low of 1.1052, with resistance near 1.1160.

    [USD, JPY]
    USD-JPY slid to 104.45 lows overnight, levels last seen in November of 2016. The gap lower came in early Asian trade overnight, which was the first opportunist to trade the pairing since Trump announced the increase in tariffs on Chinese goods. The risk-sensitive Yen reacted sharply to the news. Since then, USD-JPY put in an impressive recovery, topping at 106.40 in early N.Y. trade. Comments from China's Vice Premier Liu had a calming impact on markets, as he said that China is willing to resolve the trade dispute through dialogue. Trump later said from the G7 in France, "I think we are going to have a deal". Events can change quickly, so Yen bears will need to remain vigilant.

    [GBP, USD]
    Cable was range bound in N.Y. trade, with activity muted due to a U.K. bank holiday. The pairing opened at session highs of 1.2244, later hitting a low of 1.2207, before steadying near 1.2230. Sterling suffered some on profit taking following gains seen last week. Brexit uncertainty will limit Cable's upside potential going forward, though things are expected to hear up when the UK parliament's returns from summer recess on September 3.

    [USD, CHF]
    EUR-CHF topped 1.0902 in N.Y. as risk-on conditions returned following conciliatory words from China and Trump on the trade war front. The cross printed a fresh 25-month low at 1.0835 last Thursday amid volatility in equity markets and recession-portending inversions of the U.S. and UK yield curves, which fed safe haven demand for the Swiss currency (despite the punishing -0.75% deposit rate). While risk conditions have improved since last week, we retain a bearish view of the cross given ECB's course to additional monetary stimulus in September, and the risk of a disorderly no-deal Brexit on October 31.

    [USD, CAD]
    USD-CAD was rangebound from the Asian open overnight, bottoming at 1.3285, then rallying to 1.3315 highs into the North American start. The pairing continues to trade on either side of its 200-day moving average (1.3307), though has closed below the level for the past three sessions. The sharp slide in oil prices last week provided support, though today's WTI rally, along with risk-on conditions, have kept USD-CAD under last week's highs. Friday's 1.3339 highs marks resistance, with support at the 20-day moving average at 1.3255.

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