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By XE Market Analysis December 19, 2018 4:07 pm
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    XE Market Analysis: Asia - Dec 19, 2018

    The Dollar remained under pressure ahead of the FOMC announcement, taking the DXY to eight session lows of 96.56 early in the session. Traders pared long USD positions, and in some cases gone short on expectations the Fed will raise rates today, but signal a pause in tightening going forward. The USD perked up slightly following the FOMC announcement, where rates were raised by 25 basis points, as widely expected. The dots for 2019 hikes were reduced to 2 from three, but the statement retained the "further gradual increases in the target range..." will be needed language. EUR-USD fell under 1.1385 from 1.1435, as USD-JPY edged up over 112.45 from near 112.20.

    [EUR, USD]
    EUR-USD had been quiet over 1.1420 into the FOMC announcement, after rallying from 1.1395 lows in morning trade. The pairing slid under 1.1385 following the Fed hike, which saw the Dollar rebound on the "further gradual increases" language remaining in the Fed's statement.

    [USD, JPY]
    USD-JPY rallied over 112.45 after the Fed hiked rates, bouncing from session lows of 112.13 seen into the London close. Reaction was relatively muted overall however, as while the FOMC retained the "further gradual increases" language, the dots for 2019 hikes were reduced to 2 from 3 at the prior meeting.

    [GBP, USD]
    Cable rallied in morning trade, as the Dollar overall was under some pressure ahead of the FOMC. As the Greenback turned higher after the Fed rate hike, Cable slipped back toward 1,2615 from highs of 1.2674. The BoE's Monetary Policy Committee is in meeting, and will announce tomorrow. No policy changes are expected, and there are unlikely to be much change in guidance so soon after last month's quarterly Inflation Report, especially with Brexit uncertainty having put monetary policy in limbo.

    [USD, CHF]
    EUR-CHF has settled near the 1.1300 level. The cross remains comfortably above the two-and-a-half month low seen last Tuesday at 1.1225. The SNB remained firmly on hold at its quarterly policy meeting this month, continuing to rely on the combination of negative interest rates and the threat of intervention to limit appreciation in the currency in times of heightened uncertainty about the global outlook.

    [USD, CAD]
    USD-CAD pulled back from Tuesday's 18-month high of 1.3496, bottoming at 1.3416 after peaking at 1.3468 in the aftermath of the cooler Canadian CPI outcome. Sellers have since emerged as WTI crude prices rally over $48, up from yesterday's $46.30 low, and as the Greenback overall was under some pressure ahead of the FOMC announcement. The pairing popped over 1.3485 after the expected Fed hike, and "further gradual increases" remained in the statement.

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