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By XE Market Analysis February 22, 2019 3:36 pm
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    XE Market Analysis: Asia - Feb 22, 2019

    The Dollar headed lower on Friday in N.Y., driven largely by hopes for progress on U.S. trade talks. Trump said the deal with China is more likely happening that not happening, according to headlines on Bloomberg. The president said he could extend the trade truce a month or so with progress. China's top trade negotiator Lui said a deal is likely. EUR-USD rallied to 1.1357 from 1.1317. USD-JPY fell despite the rally on Wall Street, bottoming at 110.58 before finding support on the late trade news. USD-CAD fell to 1.3134 two-week lows, while cable bounced to 1.1380.

    [EUR, USD]
    EUR-USD has been confined to a narrow range, bottoming at 1.1317 early in the session, then rallying to 1.1357 highs late in the morning session. The 20-day moving average, currently at 1.1360, has been a good resistance point for much of the week, keeping the sell-the-rally mentality in place. A dovish ECB, slowing European growth, along side a relatively strong U.S. economy should continue to limit EUR-USD gains going forward.

    [USD, JPY]
    USD-JPY traded to 110.65 lows into the London close, after opening just under 110.90. The pairing has remained heavy despite the fairly sharp Wall Street rally, likely the result of pre-weekend cutting of long positions. Key for the Yen remains on U.S. trade talks, as Trump met with China's vice premier Liu He. Both said a trade deal was possible, and talks were extended through the weekend. USD-JPY headed from near session lows to over 110.70 on the news.

    [GBP, USD]
    Cable headed higher in N.Y. trade on Friday, bouncing from 1.2969 lows, to peak at 1.3080 The gains reflect a partial unwinding in the pound's Brexit discount, although the situation remains clouded in uncertainty.

    [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 has fallen back to 1.3175 lows, down from session highs of 1.3239 seen ahead of the unimpressive Canada retail sales report. The pairing has moved in tandem with the Greenback overall, which has eased across the board this morning. WTI crude prices have weighed as well, as they remain near three-plus month highs. The pairing later bottomed at 1.3145, under its 200-day moving average of 1.3147.

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