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By XE Market Analysis December 13, 2018 3:29 pm
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    XE Market Analysis: Asia - Dec 13, 2018

    The dollar firmed up some in N.Y. trade on Tuesday, getting an early lift from a dovish sounding Draghi at his ECB policy press conference, and lower than expected U.S. jobless claims. The DXY recovered from a three-session low of 96.89 to peak at 97.29. EUR-USD fell to lows of 1.1332, while USD-JPY was range-bound in the mid 113s. USD-CAD bottomed at 1.3338 before bouncing into the close. Cable meanwhile, held above 1.26 ending near 1.2650.

    [EUR, USD]
    EUR-USD traded to 1.1332 lows, down from highs of 1.1392 seen at the ECB policy announcement. Draghi comments have leaned to the dovish side of the ledger, keeping pressure on the Euro so far. The ECB downgraded growth estimates going forward, acknowledging that the balance of risks has moved toward the downside.

    [USD, JPY]
    USD-JPY managed nine-session highs of 113.71 in late morning trade, coming from near 113.50 into the 8:30 EST data round. The pairing later pulled back under 113.50 as Wall Street turned negative. Bigger picture, USD-JPY has largely traded inside of 112.00 and 114.00 for over a month, though with a Fed rate hike around the corner, and a softening Japanese economy, overall direction is liable to remain to the upside.

    [GBP, USD]
    Sterling tried to move higher in afternoon trade, with Cable topping at 1.2660, up from 1.2615 lows. The Conservative Party's vote of confidence in Prime Minister May supported the Pound. She cannot now be challenged again for 12 months, but the problem is that she survived with almost a third of her party having voted against her, suggesting that the EU Withdrawal Agreement is nearly certain to be rejected by Parliament -- unless in the highly unlikely scenario that the EU gives a major concession on the Irish border backstop clause; something that Ireland, in the strong negotiating position that it is in, is unlikely to acquiesce to.

    [USD, CHF]
    EUR-CHF continues to hold slightly under the 1.1300 mark after the SNB confirmed its policy setting which relies on the combination of negative interest rates and the threat of ad hoc FX intervention to keep the "highly valued" franc under control and "fragile" currency markets. Ongoing Brexit uncertainty and other political risks in Europe and on the global stage as well as protectionist tendencies will likely keep the SNB in wait and see mode for a long time to come.

    [USD, CAD]
    USD-CAD slipped from 1.3384 highs to a low of 1.3340 in late morning dealings, with pressure coming from a modest WTI crude oil rally. The pairing has remained inside of Wednesday's trading range, and consolidation is expected into next week, when the Fed is expected to raise rates by 25 basis points. The fate of oil prices remains in the mix for the CAD, as it is too soon to tell if recently agreed OPEC+ production cuts will be enough to balance the market.

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