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By XE Market Analysis December 23, 2019 12:46 pm
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    XE Market Analysis: Asia - Dec 23, 2019

    FX trade slowed to a crawl in N.Y. on Monday, with activity declining quickly into the Christmas break. The Greenback was a bit lower overall through the morning session following weak durables and softer new home sales data, though major Dollar pairings traded inside of narrow ranges. EUR-USD managed at 1.1-70 to 1.1096 band, while USD-JPY dipped from 109.45 to 109.34. USD-CAD rose to 1.3177 from 1.3154, while GBP-USD headed from 1.2905 to highs of 1.2960, after falling from near 1.3030 during the London morning session.

    [EUR, USD]
    EUR-USD rallied from 1.1070 at the open, to 1.1096 in late morning trade. The soft U.S. durables report provided support, though in the scheme of things, today's trading range of 1.1069 to 1.1096 has been sluggish to say the least, and has been the narrowest since November 28. Activity will continue to dry up, with many on at least partial holiday for Christmas Eve. The FX market won't gear up to full force until the Monday after New Year's Day. We look for EUR-USD to remain range bound to start 2020, with the U.S. economy chugging along, and European growth looking to return following the soft patch experienced through the latter half of this year.

    [USD, JPY]
    USD-JPY has put in a tiny range on Monday, idling between 109.34 and 109.50 since the Asian open overnight. We can expect more of the same through the week, with many centers closed on Tuesday for Christmas Eve, and much of the world off on Christmas Day on Wednesday.The pairing has held near the top of its two-week range, supported by firmer Treasury yields in December, and general risk-on conditions, which have seen Wall Street rally to record highs, and the Nikkei 225 to highs of the year. With the U.S. economy set to expand further in 2020, and the Japanese economy continuing to sputter, USD-JPY upside is expected to continue next year.

    [GBP, USD]
    Cable fell for the fifth-consecutive session on Monday, bottoming at near two-week lows of 1.2905.Thin markets have likely exaggerated recent Sterling weakness, driven by the remaining potential for a no deal Brexit. A big year looms for the UK, with Brexit set to happen on January 31, and with the U.K. government starting trade negotiations with the EU and other nations and trading blocs. PM Johnson last week managed to modify the EU withdrawal bill in such a way as to legally oblige the UK to leave the post-Brexit transition period at the end of 2020. This will leave just 11 months for the UK and EU to negotiate a trade deal, which many trade experts doubt is possible.

    [USD, CHF]
    EUR-CHF recovered from near three-month lows of 1.0861 seen ahead of the N.Y. open on Monday, later topping at 1.0898. The recovery came as EUR-USD rallied modestly, resulting in a short squeeze from oversold levels. Progess on Brexit and on trade should limit the cross's downside for now.

    [USD, CAD]
    USD-CAD headed to session highs of 1.3177 from near 1.3154 following the October Canada GDP miss. The data came in at -0.1% versus expectations for a flat reading. The pairing had bottomed at 1.3145 in London morning trade. The Canadian economic calendar is now completely empty until January 6. In the meantime, the 1.3100 to 1.3200 trading band seen for nearly two-weeks should hold into the New Year.

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