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By XE Market Analysis December 31, 2019 12:58 pm
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    XE Market Analysis: Asia - Dec 31, 2019

    The Dollar suffered again in N.Y. trade on the last day of the year, leaving the DXY at six-month lows of 96.36, and down from 97.71 in less than a week. Very thin trading conditions likely magnified recent moves, though the reversal of safe-haven USD flows ahead of what is expected to be a positive year for global economies has been the major driver. Wall Street was modestly lower into year-end, while Treasury yields edged higher. Incoming data included consumer confidence, which was a bit light of expectations, though had little market impact. EUR-USD topped at 1.1240, later slipping to 1.1216, while USD-JPY fell to 108.47, before recovering to 108.75. USD-CAD hit 14-month lows of 1.2949, as Cable peaked at a two-week high of 1.3182.

    [EUR, USD]
    EUR-USD peaked at better than four-month highs of 1.1240, printing five-straight sessions of higher daily highs in the process. The theme this week has been Dollar weakness, with the Greenback losing ground across the board. Year-end considerations have been the drivers, as safe-haven USD flows are reversed on shifting sentiment that global growth will improve in 2020 on the back of a cheerier trade outlook, and signs of a manufacturing recovery.

    [USD, JPY]
    USD-JPY sliced through its 200-day moving average at 108.70 during ultra-thin year-end Asian hours, exacerbated by a holiday in Japan. The pairing has bottomed at 108.47 in early N.Y. trade, and is within reach of the early December lows of 108.42. Wall Street opened lower, though has since reversed, now posting modest gains, taking some downside pressure off of USD-JPY.

    [GBP, USD]
    Cable ramped up to two-week highs of 1.3282 on the last day of the year, up from overnight lows of 1.3106. Broad Dollar weakness was the main driver, seeing the DXY fall to six-month lows, though very thin year-end liquidity likely exacerbated the rally. Brexit will be back on the radar next week, with the event set to happen at the end of January, when the UK will enter a 11-month transition period before leaving the EU outright at the end of 2020.

    [USD, CHF]
    EUR-CHF dove to a three-month low at 1.0840, which is the new culmination of quite a sharp drop from the seven-week peak of December 13, at 1.1033. The high was seen on news of the strong election victory of the Conservative Party at the UK's election, though the euro, tracking sterling, came back under pressure after UK PM Johnson implied that the no-deal threat was still an option.

    [USD, CAD]
    USD-CAD tumbled to 14-month lows of 1.2949 in early North American trade, down from 1.3070 at the Monday close. Higher oil prices, hopes for a U.S./China phase-one trade deal signing, an expansionary China manufacturing PMI, and general USD weakness all combined to support the Loonie. USD-CAD selling accelerated on the move under 1.3038, which was the low seen in October.

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