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By XE Market Analysis February 7, 2019 2:46 pm
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    XE Market Analysis: Asia - Feb 07, 2019

    The Dollar lost ground in N.Y. on Thursday, taking the DXY from two-week highs of 96.67, to lows of 96.39 into the London close. Lowered growth expectations in Europe and the U.K. lifted the Greenback into the open, though sagging yields and equities on the back of trade concerns later weighed. NEC director Kudlow said there was a long way to go on China trade negotiations. EUR-USD bounced from two-week lows of 1.1329, topping at 1.1360, while USD-JPY was rangebound between 109.61 and 109.86. USD-CAD surged over 1.33 as WTI crude plunged, while Cable topped at 1.2990 following upbeat remarks from BoE's Carney.

    [EUR, USD]
    EUR-USD recovered from earlier two-week lows of 1.1329, topping at 1.1360 by late morning. Growth and trade concerns weighed on the Dollar, as did a dovish leaning Fed's Kaplan. NEC director Kudlow also doused sentiment, saying there was a long way to go on China trade negotiations. This said, European data continue to disappoint, and we continue to look for further Euro downside.

    [USD, JPY]
    USD-JPY failed to hold the 110 handle for the fourth straight session, topping at 110.08 in London morning trade, before pulling back to 109.61 lows at the N.Y. open. Today's wobbly risk backdrop has seen the Yen perk up, and traders will look to key U.S.-China trade talks in Beijing next week. White House advisor Kudlow said on Fox Business Channel earlier that there is a "pretty sizable distance" to go with China negotiations. A lack of progress at next week's talks could bring on another wave of risk-off, likely resulting a further downside potential for USD-JPY.

    [GBP, USD]
    Sterling rallied on upbeat words by BoE's Carney, with the governor having in his post-policy meeting press conference provided some balance to the dovish tone of the central bank's communication and lowered GDP projections. He said that while Brexit-related uncertainty has risen, pausing the economy's rebalancing away from being consumption reliant, with business investment decisions being delayed, that the overall outlook was still good, especially if a no-deal scenario is avoided. He said that the BoE sees a no-deal Brexit as a low-risk probability (but has prepared for it as a matter of prudence). Cable surged over 1% over 1.2990, up from the 1.2854 low seen in the immediate wake of the BoE's announcement.

    [USD, CHF]
    EUR-CHF sank to eight-day lows under 1.1345, with the cross tipping lower by the force of broad declines in the Euro as incoming data continue to painting a picture of a stagnating Eurozone economy. Earlier in the week the cross had spiked to a three-month high at 1.1443. The price action continues a phase of relatively high volatility the cross has been experiencing. Since early January there have been several bouts of pronounced underperformance in the Swiss franc, often accompanied by talk/suspicions of SNB intervention.

    [USD, CAD]
    USD-CAD rallied to two-week highs of 1.3320 later in North American session, taking its cue from softer oil prices, and risk-off conditions. Equities were down sharply, while WTI crude shed 3.5%, falling under $52,00. Focus will now shift to Friday, when the January Canada jobs report is due. In the meantime, two-way price action can be expected, as positions are adjusted ahead of the data.

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