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By XE Market Analysis December 6, 2019 2:50 pm
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    XE Market Analysis: Asia - Dec 06, 2019

    The Dollar rallied in N.Y. trade on Friday, cutting a string of five-straight sessions of losses. A stronger than expected November jobs report, along with outsized gains in the University of Michigan December consumer sentiment index drove the USD higher. Wall Street and Treasury yields reacted as well, both moving higher. The Greenback later faded some, as pre-weekend profit taking set in. Risk taking appetite was also helped by White House adviser Kudlow, who said a China trade deal is "close". EUR-USD fell from a 1.1098 high to 1.1040 lows through the morning session, as USD-JPY retraced toward 108.55 from its early spike to 108.92. USD-CAD rallied early on a very soft Canada jobs report, while Cable recovered some from 1.3100 lows.

    [EUR, USD]
    EUR-USD touched lows of 1.1040 after the jobs and Michigan sentiment data, levels last seen on Monday, and down from overnight highs of 1.1110. Following a few U.S. data misses recently, today's figures reinforced the relative outperformance of the U.S. economy versus that of Europe, supporting the Dollar in the process. A close under the 50-day moving average at 1.1050 will be taken as a negative signal into next week.

    [USD, JPY]
    USD-JPY has given back the bulk of gains seen after the better U.S. jobs report early in the session, basing at 108.56 from 108.92 highs. Pre-weekend profit taking was a driver of the modest sell-off, despite surging stocks, and upbeat news on the trade front. Looking ahead, given improved odds for a phase-one U.S./China trade deal, along with a still-growing U.S. economy, we look for upside risk for USD-JPY going forward.

    [GBP, USD]
    Cable topped out at a seven-month high on Thursday at 1.3166, and was range bound during Friday's N.Y. session, dropping to 1.3100 following strong U.S.data, though rallying back to 1.3140 after the London close. With less than a week to go until the UK's general election, it's looking increasingly unlikely that Labour will close the popularity gap with PM Johnson's Conservative party. Politico's poll track has the Conservatives with 43% support, unchanged from Monday, and Labour with 33% support, also unchanged from Monday. The Pound is likely to remain elevated through next week's election.

    [USD, CHF]
    EUR-CHF fell to a two-week low under 1.0925 in N.Y. on Wednesday, later bouncing to 1.0969 as risk appetite returned following reports that the U.S. and China are near a phase one trade deal. Broad risk-off conditions weighed on the cross on Tuesday, as trade concerns ramped up yet again. Friday's session saw range-bound conditions in place.

    [USD, CAD]
    USD-CAD rallied to 1.3270 highs from 1.3175 following the mix of employment reports, where the U.S. outcome was much stronger than expected, and the Canadian report revealing the largest job reduction since the great recession. The data calls the BoC's on-hold outlook into question, and should continue to support USD-CAD for now. The rally has paused for now, but a move over the 1.3259 20-day moving average should bring the 200-day moving average at 1.3278 into view.

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