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By XE Market Analysis December 12, 2019 2:59 pm
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    XE Market Analysis: Asia - Dec 12, 2019

    The DXY bounced from four-month lows of 97.04 in N.Y. trade on Thursday, taking the index to 97.51 highs after the London close. Cooler U.S. PPI, along with a surge in jobless claims saw the USD dip a bit early, though a Trump tweet saying "Getting VERY close to a BIG DEAL with China. They want it, and so do we!" turned the tide for the Greenback. In addition, the WSJ reported that the U.S. has offered to cancel the new tariffs, set to kick in on Sunday, and cut existing tariffs by 50%. Wall Street and Treasury yields surged higher as well. There was little impact from the ECB meeting, where no policy changes occurred. Lagarde sounded more upbeat on the EU economy, though EUR-USD fell to 1.1104 from 1.1154 highs. USD-JPY was boosted over over 108.30 from near 108.60, while USD-CAD recovered from 1.3193 from near 1.3170. Cable plunged toward 1.3150 from near 1.3230 trend highs.

    [EUR, USD]
    EUR-USD was stopped dead in its tracks into the 200-day moving average at 1.1155, peaking at a one-month high of 1.1154, then heading to lows of 1.1103 after the London close. The pairing headed higher as ECB's Lagarde painted a rosier picture for the Eurozone economy during her policy press conference this morning, helpful to the Euro. EGB yields rose, though Treasury yields rose more following the upbeat trade news, eventually giving the Dollar a leg up on the Euro.

    [USD, JPY]
    USD-JPY rallied over 109.30 from 108.60, a nine-session high, following a Trump tweet on trade, where he said "Getting VERY close to a BIG DEAL with China. They want it, and so do we!" In addition, the WSJ reports that the U.S. has offered to cancel the new tariffs, set to kick in on Sunday, and cut existing tariffs by 50%. The risk-sensitive pairing shot higher as Wall Street took the Trump bait, and turned opening losses into significant gains, with the major indices up nearly 1%.

    [GBP, USD]
    Cable was hammered lower through the session, with position squaring driving the action ahead of the U.K. election results. The pairing bottomed near 1.3050 after the London close, from the eight-plus month peak of 1.3228 that was seen during the Asian session. The results of the election will start to come in at 22:00 GMT (17:00 ET).

    [USD, CHF]
    EUR-CHF has settled in the mid to lower 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 bounced to 1.3193 highs after failing to trade under Wednesday's one-week low of 1.3160. The pairing bottomed at 1.3161 in London morning trade. The dovish leaning Fed chair Powell yesterday took the wind out of the USD's sails, seeing the Greenback drop broadly, and leaving the DXY at four-month lows. A round of Dollar short covering has seen most major pairings recover some this morning, including USD-CAD. Given firm oil prices, and a U.S. rate hike in 2020 taken off the table, the pairing's upside potential going forward may be limited.

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