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By XE Market Analysis December 9, 2019 2:55 pm
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    XE Market Analysis: Asia - Dec 09, 2019

    The Dollar perked up a bit in N.Y. on Monday, after losing some ground overnight. The DXY remained under Friday's post-jobs report high, with ranges overall remaining narrow. There was no incoming data to drive the FX market, and we now look for some consolidation ahead of Wednesday's FOMC announcement, and Thursday's ECB meeting. Wall Street pulled back some on reported profit taking following Friday's surge higher, while Treasury yields were slightly lower. EUR-USD faded from 1.1078 highs seen at the open, easing to 1.1056 later in the session. USD-JPY recovered from 108.44 to 108.66, while USD-CAD bucked the trend, slipping to 1.3222 from 1.3258 on higher oil prices. Cable pulled back from eight-month highs of 1.3181 seen in Asia, to 1.3136 at mid-morning.

    [EUR, USD]
    EUR-USD faded from early highs of 1.1078, dipping to 1.1056 into the London close. The pairing has remained above Friday's one-week, post-jobs report lows of 1.1040. The 50-day moving average at 1.1055 has so far provided support, which should keep a floor under the Euro until the FOMC and ECB policy announcements on Wednesday and Thursday, respectively. Resistance remains in place at the 1.1100 level.

    [USD, JPY]
    USD-JPY was under some pressure overnight, following a much stronger than expected Japan Q3 GDP revision, and weaker China export data. The pairing fell from 108.66 highs to a low of 108.43 in London morning trade, since edging up to 108.68 in N.Y.. U.S./China trade concerns remain, with no news on progress of a phase-one deal heard, and fresh U.S. tariffs set to kick in this coming Sunday. This should keep a lid on the risk-sensitive pairing for the time being. Resistance comes at the 200-day moving average at 108.84.

    [GBP, USD]
    Cable drifted back under 1.3136 from the eight-month high at 1.3181 seen in Asia. Polls and betting markets are strongly pointing to PM Johnson and his Conservative party winning the election and returning to Parliament with an outright majority. The mostly likely "unexpected" outcome would be for the Conservatives to win by fall short of a majority, which would open the possibility of the Liberal Democratic party becoming king maker. We assume in such a scenario that the LibDems would lean to the Conservatives rather than join forces with Labour, having already made clear that they would be open to this on the condition that there is a second referendum on EU membership. Overall, we still expect the Conservatives to win with an outright majority, which will keep the Pound supported going forward.

    [USD, CHF]
    EUR-CHF has settled in the mid 1.0900s after a spell of relatively choppy trading. The cross has managed to base above the three-week seen last Wednesday at 1.0921 after rotating lower from levels above 1.1000. The cross to a degree been correlating with the ebb and flow of global stock markets, with the franc retaining a function as a safe haven currency despite the -0.75% deposit rate in Switzerland.

    [USD, CAD]
    USD-CAD was stuck between 1.3248 and 1.3265 in early North America, largely holding the gains seen following the weak Canada jobs report, and strong U.S. employment reports released on Friday. Oil prices have offset to a degree, supportive of the CAD, as WTI crude sits near two-month highs, over $49, allowing USD-CAD to later ease to 1.3222 lows. Softer Canada data calls the BoC's on-hold outlook into question, and should continue to support USD-CAD for now. The rally has paused, but a move over the 200-day moving average at 1.3278 could result in a test of the November high of 1.3327.

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