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By XE Market Analysis February 14, 2018 2:49 pm
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    XE Market Analysis: Asia - Feb 14, 2018

    Hot U.S. CPI data, and a surge in Treasury yields dod little to help the dollar on N.Y. on Wednesday. While the greenback popped briefly after the data, sellers quicjly stepped in, taking the DXY to eight session lows of 89.07. The U.S. deficit outlook may be behind some of the USD's struggles this week, with massive shortfalls expected following tax and budget legislation. EUR-USD bottomed at 1.2276 before rallying to a high of 1.2439. USD-JPY printed 15-month lows of 106.73, though later recovered to 107.00 as Wall Street rallied. USD-CAD bottomed at 1.2520, as cable touched the 1.4000 mark.

    [EUR, USD]
    EUR-USD printed an eight-session high of 1.2442, with steady gains seen following the initial post-U.S. CPI dip. The dollar overall has taken it on the chin since then, despite firmer yields and the hot CPI reading. U.S. deficit worries have been on the rise following unfunded tax and budget legislation, which may be partially behind the dollar's slide this week.

    [USD, JPY]
    USD-JPY printed 15-month lows of 106.72, as the dollar remains under broad pressure, despite the hotter U.S. CPI data earlier, and firmed up yields. The DXY has fallen back to eight-session lows of 89.24 after topping at 90.12 after the inflation numbers. The 2017 low of 107.332 looks to be a good resistance level, with a close under there opening the door for further losses overnight.

    [GBP, USD]
    The pound underperformed once again. Cable's price action has largely tracked EUR-USD's since the U.S. CPI release, while the pound itself failed to benefit from the latest BoE agents' report finding businesses are starting to award higher wage demands. Brexit remains the bugbear of sterling, with negotiations having entered a crucial phase with the government still appearing divided. Cable briefly traded over 1.4000 into the close, as the dollar overall came under pressure.

    [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 spiked up to 1.2649 from 1.2580 after the hotter U.S. CPI outcome, hung near highs for a while, then crashed back to 1.2533, a six-session low, as the greenback came under broad pressure, and as WTI crude ramped higher following a bullish EIA inventory report.

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