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By XE Market Analysis December 18, 2019 2:38 pm
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    XE Market Analysis: Asia - Dec 18, 2019

    FX trade was very quiet in N.Y. on Wednesday, though the DXY managed a one-week high of 97.47 early in the session. There was no data to drive the market, though firmer Treasury yields provided some support to the USD. EUR-USD ranged between 1.1111 and 1.1134, closing out the day near its lows. USD-JPY drifted inside a 109.63 to 109.49 trading band, while USD-CAD steadied near 1.3110, down from over 1.3150. GBP-USD bottomed at 1.3060.

    [EUR, USD]
    EUR-USD printed a one-week low of 1.1111 in early N.Y. trade, later lifting to 1.1134, then falling back to lows again into the London close. Bids are rumored at the 1.1100 mark, with sell-stops seen just below the level. Going into year-end however, follow through selling is liable to be limited. The 50-day moving average at 1.1079 will be the next support level.

    [USD, JPY]
    USD-JPY put in another low-energy day, ranging between 109.63 and 109.49 since the N.Y. open. More of the same can be expected into year-end, as traders close books for the year. Firmer Treasury yields and a slightly higher Wall Street have provided a modicum of support through the session, though follow through buying is not expected. Indeed, the pairing has posted three straight lower daily highs this week, perhaps a signal for a move lower, with the 20-day moving average at 109.04 the next downside target.

    [GBP, USD]
    Cable posted a fresh six-day low at 1.3060, which is a big figure under levels prevailing just ahead of initial the UK election results. The pair had in the interim rallied to 1.3515 before turning sharply lower. UK prime minister Johnson obliged markets to re-factor in a measure of a no-deal Brexit discount into the pound, by pledging to modify the EU withdrawal agreement so that it legislates against any extension in the post-Brexit transition period beyond 2020. We doubt he's serious, and such legislation could easily be reversed at will given Johnson's commanding parliamentary majority. His aim is clearly to strengthen his government's negotiation hand with the EU, by arming it with a "walk away" option during upcoming negotiations for a new trade deal.

    [USD, CHF]
    EUR-CHF dipped to one-month lows of 1.0896, after spiking on Friday to a six-week peak of 1.1033 on news of the strong election victory of the Conservative Party at the UK's election. This heralds the end of a protracted period of Brexit related uncertainty, which had been casting a pall over both the UK and European economies. The euro also posted gains against the dollar and yen, and most other currencies, with the main exception being the case against the pound.

    [USD, CAD]
    USD-CAD headed to intra day lows of 1.3125 from 1.3150 following the in-line Canada CPI print, and down from 1.3176 overnight highs. Progress on the USMCA and phase one U.S./China trade fronts have been supportive of the CAD this week, leaving Monday's one-month lows of 1.3112 in the cross hairs. Below there, the November 11 base of 1.3109 is targeted.

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