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By XE Market Analysis February 19, 2019 3:32 pm
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    XE Market Analysis: Asia - Feb 19, 2019

    The Dollar index fell to nearly two-week lows in N.Y. on Tuesday, bottoming at 96.43, a d down from pre-open highs of 97.09. A dovish spin from Fed's Mester, softer Treasury yields, and a fairly steady risk backdrop weighed down the Greenback. Aside from upbeat housing data, the economic calendar was empty, giving markets little guidance. EUR-USD rallied to 1.1347 from 1.1275 lows, as USD-JPY dipped under 110.50. USD-CAD touched 1.3208 lows, with the CAD aided by higher oil prices. Cable hit a two-week high over 1.3065.

    [EUR, USD]
    EUR-USD has rallied from 1.1275 lows seen into the open, to 1.1347 highs ahead of the London close. Dovish comments from the Fed's Mester earlier supported the pairing. She reiterated she fully supports the FOMC's wait-and-see approach in her speech on The Economy, Monetary Policy, and Policy Communications. She also said the economy is dynamic, and the Fed is data dependent. The February 8 high of 1.1351 is the next upside target.

    [USD, JPY]
    USD-JPY has bounced from early session lows of 110.56, topping at 110.70. The move came as Wall Street attempted to move into positive territory, after opening modestly under water. Overnight comments from BoJ chief Kuroda provided some support, as he said further Yen strengthening might result in additional easing measures. Later, dovish comments from the Fed's Mester took the pairing to just under 110.50. Support is at the 50-day moving average of 110.07, with resistance at the 200-day moving average up at 111.31.

    [GBP, USD]
    Sterling has traded higher against the dollar and euro, after the spokesman for UK prime minister said that tomorrow's meeting between May and the president of the European Commission, Juncker, will be "significant." Slack confirmed that May will be looking for a legally binding concession on the Irish backstop. For many observers, the UK government seems to be living in a Twilight reality, as the EU has continued to remain implacable on the Irish backstop being a red line that cannot be crossed. Cable printed a better than two-week high of 1.3066.

    [USD, CHF]
    EUR-CHF has settled in the mid 1.1300s after correcting from a six-day high that was seen last Tuesday at 1.1406. The price action has continued a phase of relatively high volatility that 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. SNB vice president, Zurbruegg, said last month that the franc "remains highly valued" and the situation on foreign currency markets is "still fragile" and that the SNB's two pillar strategy of negative interest rates and ad-hoc currency interventions, or threat thereof, "remains appropriate." SNB Chairman Jordan said recently that for 2019 the biggest concerns are "political mistakes," pointing to the U.S.-China trade war and "Brexit and the European situation." Jordan also expressed concern about further safe-haven driven franc appreciation, "especially" in a no-deal Brexit scenario.

    [USD, CAD]
    USD-CAD rallied to 1.3283 highs from 1.3237 at the open, following WTI crude's lead, which has fallen about $1/bbl to $55.66 lows since the North American open. The pairing later fell to 1.3215 lows as the USD came under broad pressure, and as oil prices erased losses. The pairing traded under its 20-day moving average in the process.

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