Home > XE Currency Blog > XE Market Analysis: Asia - Jan 07, 2020


XE Currency Blog

Topics7383 Posts7428
By XE Market Analysis January 7, 2020 2:09 pm
    XE Market Analysis's picture
    XE Market Analysis Posts: 5307
    XE Market Analysis: Asia - Jan 07, 2020

    The Dollar was higher in N.Y. trade on Tuesday, taking the DXY to highs of the week at 97.09 from opening levels near 96.73. Safe-haven USD buying was a feature through the session, driven by the nervous geopolitical backdrop. A much stronger services ISM helped support the Greenback as well. Wall Street was mixed, while Treasury yields were little changed. EUR-USD slipped steadily through the morning session from 1.1180, bottoming at 1.1134. USD-JPY meanwhile, dipped to 108.32 from near 108.50, later recovering to intra day highs of 108.63. USD-CAD topped at 1.3030, up from 1.2975 at the open, while GBP-USD slipped briefly under 1.3100.

    [EUR, USD]
    EUR-USD traded to lows of the week at 1.1134, moving under its 200-day moving average at 1.1142. Safe-haven flows into the Dollar picked up a bit on Iran uncertainty, while a better services ISM helped USD sentiment as well. The next support comes at the January 3 low of 1.1125. A close under the 200-day MA will be taken as a bearish signal. Traders will look to Germany manufacturing orders on Wednesday for Euro direction. We expect a 0.3% m/m rise, versus the previous 0.4% decline.

    [USD, JPY]
    USD-JPY fell from early N.Y. session highs of 108.49 to 108.32 after Wall Street took a tumble at the open, though saw buying interest step in ahead of the overnight low of 108.26, and after the better services ISM, resulting in USD-JPY's pop back to 108.63 highs. Further gains can be expected to be limited, as the pairing will remain sensitive to the risk-backdrop, and current high levels of geopolitical uncertainty.

    [GBP, USD]
    Cable settled in the lower 1.3100s after peaking at 1.3212 in London morning trade. A broadly firmer dollar was the driver of the move. UK prime minister Johnson will be meeting with new president of the European Commission, von der Leyen, along with the EU's chief Brexit negotiator, Barnier, on Wednesday. This is where the UK will finally start to talk about a new, post Brexit, trade deal with the EU, and comes with Johnson pledging to limit the post-Brexit transition period to the end of this year. We don't see Johnson as being serious about taking UK out of the EU without a trade deal, but for now, expect Johnson to remain rhetorically resolute, which will cap the pound's upside potential.

    [USD, CHF]
    EUR-CHF fell to 1.0810 in N.Y. matching the previous low seen in September, which at the time was a 28-month bottom. The selling has been driven by the Franc's safe-haven status, coming on the back of geopolitical fears in the mid-east. The new low is the culmination of quite a sharp drop from the seven-week peak of December 13, at 1.1033.

    [USD, CAD]
    USD-CAD edged up to six-session highs of 1.3030 in morning North American trade, up from London lows of 1.2954. WTI crude's better than $2/bbl pullback from Monday's eight-month high of $64.72 provided some support, while short covering ahead of last week's 14-month low of 1.2949 was noted. Given the uncertainty of the U.S./Iran backdrop, oil prices are likely to remain relatively firm, which will limit USD-CAD's upside going forward.

    Paste link in email or IM