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By XE Market Analysis December 21, 2018 2:40 pm
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    XE Market Analysis: Asia - Dec 21, 2018

    The Dollar rallied in N.Y. on Friday. taking the DXY to 97.00, from 96.26 lows. USD short covering was a major driver, as many will be off work for much of next week, leaving liquidity at a premium. Today's U.S. data was mixed, seeing Q3 GDP revised down a tenth to 3.4%, and Michigan sentiment heading higher. Income and consumption data were largely in line with expectations.

    [EUR, USD]
    EUR-USD reversed most of Thursday's gains on Friday, as the Dollar overall headed higher. The theme has largely been USD short covering ahead of what will be an extended long weekend for many. EUR-USD has bottomed under 1.1365 going into the close, coming from over 1.1470 in London morning trade.

    [USD, JPY]
    USD-JPY has remained near session highs of 111.35, which was seen following the stronger U. Michigan sentiment outcome. The pairing has shrugged off the latest Wall Street meltdown, and it appears that short covering into what will be an extended weekend for many has provided the bulk of support. USD-JPY had posted three-plus month lows of 110.82 on Thursday.

    [GBP, USD]
    Cable was relatively calm in N.Y. trade, ranging between 1.2690 and 1.2620 through the session. The parliamentary vote on the Brexit deal and outline for a future relationship will take place in the week of January 14, before the legislated deadline of January 21. Our best guess remains that Parliament will vote down the deal and, of all the possible scenarios at that point, that a new EU referendum will be the path of least resistance. Until the New Year however, Sterling is liable to hunker down inside of recent ranges.

    [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 has rallied to fresh 19-month highs of 1.3584, with the CAD losing ground early on softer Canada retail sales, before moving to session highs as the Greenback overall benefits from pre-weekend short covering. WTI weakness has certainly not helped the Loonie this week, as oil fell nearly 10% this week from top to bottom, taking USD-CAD from 1.3372 lows on Monday, to 1.3584 today. The next upside target is the May 19, 2917 peak of 1.3612.

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