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By XE Market Analysis February 20, 2019 3:34 pm
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    XE Market Analysis: Asia - Feb 20, 2019

    The dollar ticked higher after the release of the FOMC minutes, EUR-USD faded under 1.1340 from 1.1370, while USD-JPY rallied over 110.80 from near 110.65. The minutes revealed few surprises, and the FX reaction appeared to be a bit of "buy the news" for the Dollar. The Greenback had been under pressure through the morning session ahead of the minutes.

    [EUR, USD]
    EUR-USD idled near two-week highs of 1.1372, up from 1.1324 lows seen into the open ahead of the FOMC minutes. The pairing has risen every day this week so far, as trade-talk hopes crimp safe haven Dollar buying, and as dovish Fedspeak keeps the USD overall under pressure. Euro buying was in vogue into the minutes release, with expectations for a dovish outcome the prominent view. There were no real surprises though, and position squaring ensues, taking EUR-USD under 1.1340.

    [USD, JPY]
    USD-JPY faded ahead of the FOMC minutes, bottoming at 110.62. The pairing bounced on the minutes, peaking over 110.80, as short covering stepped in. There was little reaction overall, with the minutes about in line with market expectations.

    [GBP, USD]
    Cable printed better than two-week highs in N.Y. trade, peaking at 1.3110 on general Dollar weakness. The pairing later pulled back under 1.3055, as the USD found its footing following the FOMC minutes. On Brexit, a UK cabinet source cited by the Guardian today said that ministers have noticeably turned against using the no-deal threat as a negotiating tactic. This supports our conviction May and/or parliament, with the help of Brussels if necessary, will ensure that a no-deal Brexit scenario doesn't become a reality.

    [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 traded to two-week lows of 1.3152 in morning trade, with selling pressure coming on the back of another trend high in WTI crude prices. General USD softness has been a feature for a week now, as a Fed on hold, and hopes for a U.S.-China trade agreement have limited safe haven USD buying. The pairing perked up to 1.3175 following the Fed minutes, as general USD short covering set in. Canada's calendar reveals wholesale data on Thursday, and retail sales on Friday.

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