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By XE Market Analysis December 20, 2018 2:38 pm
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    XE Market Analysis: Asia - Dec 20, 2018

    The Dollar rallied some in early N.Y. trade on Thursday, largely as short covering stepped in following the DXY's move to one-month lows in Europe. U.S. government shutdown jitters, and another Wall Street swell-off later saw the Greenback retrace lower. Trump said he would not sign the latest continuing resolution, which would fund many government departments through early February. As it stands at the time of this writing, the shutdown looms at midnight on Friday. EUR-USD bottomed at 1.1403 before bouncing to near 1.1475. USD-JPY topped at 111.83 before dipping to 110.97, a three-month low. USD-CAD rallied to trend highs of 1.3531 as WTI oil prices crashed back under $46.

    [EUR, USD]
    EUR-USD has dropped to 1.1403 lows before finding a footing, coming from six-week highs of 1.1485 seen ahead of the N.Y. open. The Dollar generally has perked up this morning, driven largely by USD short covering, after the DXY posted one-month lows in London. With the Fed's rate hike trajectory altered following Wednesday's FOMC announcement, Dollar gains going forward may be hampered.

    [USD, JPY]
    USD-JPY was at nearly two-month lows, bottoming at 111.50 at mid-morning, as slumping risk taking levels remained in place, with Wall Street getting slammed again. The next key level for the pairing was the October 26 bottom of 111.38, which was later breached after Trump said he would not sign the CR which would prevent a government shutdown. Wall Street dove on this news taking USD-JPY to lows under 110.85.

    [GBP, USD]
    Cable posted gains versus the dollar, although a rebound in the U.S. currency pared the advance. The widely expected no-change policy decision by the BoE had little impact. The statement and minutes didn't convey much shift in guidance, being so soon after last month's quarterly Inflation Report, and especially with Brexit uncertainty having put monetary policy in limbo. As for Brexit, all bets are off until the new year, with the UK Parliament having shut shop for the Christmas recess and with the London interbank market having entered into the year-end doldrums.

    [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 peaked at 1.3504 overnight, just under Wednesday's post-FOMC, 18-month high of 1.3506. Fresh lows in WTI crude prices supported earlier, but broad USD weakness, and a partial recovery in oil since then has allowed the pairing to drift back toward 1.3450.Later, the pairing ran up to 1.3531, marking new 18-month highs, as crude oil crashed back to trend lows under $46.00.

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