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By XE Market Analysis December 6, 2017 3:43 pm
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    XE Market Analysis: Asia - Dec 06, 2017

    A lower than expected productivity revision weighed on the dollar early on, folowing an in-line ADP jobs report. From there, the greenback caught a mild bid, takiung EUR-USD from 1.1824 higsh to 1.1780 lows. USD-JPY bottomed at 112.11 before later topping at 112.37. USD-CAD shot higher on the combination of the BoC's lack of rate hike, and softer oil prices. That pairing peaked at 1.2807, and up from 1.2653. Cable stayed soft on Brexit concerns. idling near 1.3380 in afternoon trade.

    [EUR, USD]
    EUR-USD printed new two-week lows of 1.1780, breaking below its 20-day moving average of 1.1803 in the process. Today marks the third straight session of lower daily highs and lows, which may embolden technically driven players to push for the November 22 base of 1.1733. With nothing urgent on economic calendars until Friday's U.S. jobs report, traders may well bide their time until then.

    [USD, JPY]
    USD-JPY bottomed at 112.11 in the aftermath of the softer productivity revision, turning higher from there, though managing a peak of just 112.37, which represents the 20-day moving average. Dodgy risk taking levels and softer yields kept the rally limited, and further gains can be expected until risk-on returns. Major support comes in at 111.68, the 200-day moving average.

    [GBP, USD]
    The pound managed a bounce, which may well prove to be of the dead cat variety after earlier posting fresh lows after British prime minister said that the government will not spell out details of the plans to avoid there being a hard border between Northern Ireland and the Republic until the divorce agreement has been made with the EU. Cable hit a five-session low at 1.3358 before recouping above 1.3380.

    [USD, CHF]
    EUR-CHF has seen volatile price action over the last several sessions, having on Friday turned sharply lower, to a low of 1.1599 after clocking a 35-month high of 1.1737, and subsequently, yesterday, lifting briefly back above 1.1700. There have been multiple failures to sustain gains above 1.1700 over the last month, and market participants will be wary of supply above this level. We remain bullish over the medium term, however. Assuming the Eurozone has conquered, or can conquer, existential political threats, and assuming the SNB remains anchored to ultra-accommodative monetary policy, which looks likely to be the case for the foreseeable, we anticipate EUR-CHF will make an eventual return to 1.2000.

    [USD, CAD]
    USD-CAD spiked higher following the BoC policy announcement, where rates were left unchanged, as expected. The pairing rallied from 1.2610 to highs so far of 1.2747. The bank's statement said the council remains cautious, and guided by incoming data, and that the outlook remains subject to "considerable" geopolitical and trade policy uncertainty. That said, the statement said higher rates will be required over time. Later, the pairing rallied to 1.2807 highs, as WTI crude fell 2%.

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