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By XE Market Analysis January 2, 2019 2:56 pm
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    XE Market Analysis: Asia - Jan 02, 2019

    The Dollar rallied in N.Y. on the first trading day of the year, taking the DXY to 96.88 highs, up from 96.27 into the open. Safe-haven flows were behind the Greenback's gains early on, as Wall Street opened sharply lower on the back of China growth concerns. Aside from Markit PMI data, there was no data on Monday. EUR-USD fell to 1.1336 lows, a nearly two-week bottom from 1.1400 at the open. USD-JPY dipped to 108.82, later rallying over 109.40 as Wall Street pared losses. USD-CAD topped at 1.3663 early, before slipping back to 1.3569 on firmer oil prices. Cable fell to 1.2582 lows.

    [EUR, USD]
    EUR-USD printed five-session lows of 1.1336, coming from overnight highs of 1.1497. The Dollar was supported by safe-haven flows on the back of early risk-off conditions. The Euro meanwhile, was weighed down by components of the December manufacturing PMI report, which revealed an unrevised headline of 51.4, but a third consecutive month of decline new orders, and confidence for the year ahead hitting a six-year low. Next support comes at 1.1342, the December 26 bottom.

    [USD, JPY]
    USD-JPY recovered from opening lows of 108.82, topping at 109.46 as Wall Street cut early significant losses. The Yen continues to move inversely with risk taking levels. Near term support comes at the overnight 7-month low of 108.71, with resistance at the overnight high near 109.70.

    [GBP, USD]
    Cable posted nearly three-week lows of 1.2582 in N.Y., with markets ignoring the stronger than expected headline reading in the December UK manufacturing PMI, which showed that Brexit contingency-related activity had buoyed activity in the sector, with the underlying trend remaining demonstrably weak. Regarding Brexit, it's clear that there won't be any renegotiation by the EU and that, in all likelihood, the Withdrawal Agreement from the EU is headed for eventual failure in the UK Parliament. The parliamentary vote on the Brexit deal and outline for a future relationship will take place in the week of January 14, before the legislated deadline of January 21. Our best guess remains that Parliament will vote down the deal and, of all the possible scenarios at that point, a new EU referendum will be the path of least resistance.

    [USD, CHF]
    EUR-CHF has continued to gravitate around 1.1250-1.1300. The cross has remained comfortably above the two-and-a-half month low seen in December at 1.1225. The SNB remained firmly on hold at its quarterly policy meeting last month, continuing to rely on the combination of negative interest rates and the threat of intervention to limit appreciation in the currency in times of heightened uncertainty about the global outlook.

    [USD, CAD]
    USD-CAD rallied back to near trend highs, topping at 1.3663 in early North American trade. WTI crude fell back to four-session lows on global growth concerns, following China's weak manufacturing PMI, which weighed on the CAD. In addition, general risk-off conditions underpinned USD-CAD. Monday's 19-month highs of 1.3664 will be the next upside target.The pairing later retraced to 1.3569 lows, with the slide coming on the back of the surge in WTI crude prices. Oil had bottomed at $44.38, than ramped up to $47.76 following reports that Saudi exports fell in December, and were set to fall further as agreed output cuts kick off in January.

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