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By XE Market Analysis February 12, 2018 3:16 pm
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    XE Market Analysis: Asia - Feb 12, 2018

    The dollar lost some ground overall in N.Y. trade on Monday, leaving the DXY at lows of 90.19, down from early highs at 90.43. The unwinding of safe-haven dollar buying seen amid the equity meltdown last week came undone to a degree. EUR-USD topped at 1.2290 from opening lows of 1.2235. USD-JPY remained above 108.50, with risk on conditions providing support, as Wall Street surged higher. USD-CAD traded either side of 1.2600, while cable found buyers into 1.3800.

    [EUR, USD]
    EUR-USD topped at 1.2289 in N.Y. trade, as traders unwound some of last week's short positions. Safe-haven dollar buying was a feature last week, as equity markets melted down, though with Wall Street sharply higher today, profit taking has taken hold. Resistance comes at 1.2300, then at the 20-day moving average of 1.2332.

    [USD, JPY]
    USD-JPY held well above Friday's five-month low of 108.05, currently trading near intra day highs over 108.70. The improved risk backdrop has been supportive, with global equity markets mostly higher. Firmer U.S. Treasury yields have also brought in some buyers. Traders will keep an eye on Wall Street, as given the volatility seen over the past week, current gains could quickly become losses.

    [GBP, USD]
    Sterling was a bit lower on the day versus the dollar in N.Y, bottoming at 1.3797. The pound is still showing average decline of 0.75% versus the G3 currencies on a week-on-week basis, despite the BoE's hawked-up guidance of last Thursday, with a consequent rally in the pound curtailed and reversed by a re-emergence of Brexit concerns, with EU's chief Brexit negotiator, Barnier, having said that a transition deal is "not a given." Attention will remain on Brexit negotiations, while UK January inflation data will bring an economic focus to sterling markets.

    [USD, CHF]
    EUR-CHF broke lower last week, leaving a four-month low at 1.1446. The cross has since settled in the lower 1.1500s. We expect directional bias to remain to the downside while the risk-off phase persists. The cross is seeing its biggest correction seen since the Swiss franc started to trend lower in mid last year, reflecting EUR-USD declines amid dollar outperformance and euro selling amid the ECB's evident disquiet about the extend of the euro's recent rally, which looks to have had a dampening impact on hawkish voices at the ctral bank. There is also some concern appearing in market research notes about the Italian election in early March, given the popularity of EU-sceptic Northern League.

    [USD, CAD]
    USD-CAD traded at 1.2622 highs, after bottoming at 1.2556 overnight. Firmer oil prices limited upside, though overall USD sentiment remains soft in light of the bounce in risk taking levels. WTI crude remained near the key $60/bbl level. Note, the contract had bottomed at $58.09 on Friday. The 50-day moving average at 1.2576 may remain a focal point for USD-CAD for now.

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