Home > XE Currency Blog > XE Market Analysis: Asia - Jan 08, 2019

AD

XE Currency Blog

Topics6214 Posts6259
By XE Market Analysis January 8, 2019 2:35 pm
    XE Market Analysis's picture
    XE Market Analysis Posts: 4246
    XE Market Analysis: Asia - Jan 08, 2019

    The Dollar advanced modestly in early N.Y. trade on Tuesday, taking the DXY to 96.03 highs from 95.71 lows. Sentiment was buoyed by U.S.-China trade talks, which appear to be making some progress. The two sides added an extra day of negotiations on Wednesday. Wall Street rose for the third consecutive day. EUR-USD was range bound, posting 1.1423 lows early in the session. USD-JPY topped at 108.96 before pulling back, while USD-CAD peaked at 1.3323 from early lows of 1.3277. Cable meanwhile, fell to 1.2709 lows.

    [EUR, USD]
    EUR-USD has been steady again through the N.Y. session, easing from 1.1452 at the open to 1.1423 lows, before settling in over 1.1440. Weak German production figures, along with softer Eurozone confidence readings put some weight on the Euro earlier, though the pairing overall remains range bound.

    [USD, JPY]
    USD-JPY has pulled back from the four-session highs of 109.08 printed in London morning trade, now at 108.72, after peaking at 108.95 after the open. Wall Street has pared its gains, though remains in positive territory, as U.S.-China trade talks appear to be making progress. As long as the two sides remain engaged, downside for USD-JPY should be contained.

    [GBP, USD]
    Cable ebbed back to the lower 1.2700s after printing a nine-day peak at 1.2798 at the London interbank open. We expect the Pound will see an overall flat-to-heavy bias into next Tuesday's UK Parliament vote on the EU Withdrawal Agreement and outline for a future relationship. Germany and Ireland have been working on ways to improve the communication of the "future relationship" part by way of coming up with better solutions to maintain a free flowing border between Ireland and Northern Ireland. The aim of this effort is to help UK Prime Minister May get the vote through Parliament; but, the problem is it leaves the Irish border backstop, as detailed in the Withdrawal Agreement firmly in place, and, as such, it continues to look highly probably that the deal will be voted down.

    [USD, CHF]
    EUR-CHF steadied around the lower 1.12s amid a backdrop of revived risk appetite in global market. The cross had last week punched out a four-month low at 1.1184, which was seen as the Swiss franc picked up safe haven demand in the wake of Apple's revenue warning (which in turn followed December manufacturing PMI data showing weakening across key global economies). 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 recovered from one-month lows of 1.3265 seen in London, trading to 1.3300 highs in early North American trade. Canada's trade balance came in near expectations, and had little impact on the Loonie. Firmed up oil prices, and risk-on market conditions have allowed the CAD to rally recently, while USD weakness has been a factor as well following the dovish undertones of Fed chair Powell comments last week. The CAD is likely to steady into Wednesday's BoC policy meeting.

    Paste link in email or IM