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By XE Market Analysis January 10, 2017 2:37 pm
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    XE Market Analysis: Asia - Jan 10, 2017

    The dollar meandered inside of recent ranges through the N.Y. session on Tuesday, with the unit mixed overall. Aside from wholesale data, which were ignored, the calendar was bare. Wall Street managed modest gains, while yields slipped some. President-elect Trump's Wednesday press conference could be of some market interest, depending on how much detail The Donald is willing to give on matters such as tax, regulation and the like. EUR-USD topped at 1.0604 early on, then faded to 1.0552 lows. USD-JPY meanwhile, faded from 116.34 highs, basing at 115.34 before recovering over 116.00 on improved risk levels. USD-CAD remained heavy despite WTI crude's dip under $51.20, while cable was stuck in the mid-1.21s.

    [EUR, USD]
    EUR-USD has printed intra day lows of 1.0552, coming from 1.0604 highs at mid-morning. Wall Street continued to make its way higher, with the improved risk backdrop helping dollar sentiment overall. The pairing has traded between its 20-day and 50-day moving averages for a week now, with the 20-day, currently at 1.0634 seen as resistance, and the 50-day, at 1.0473, standing as support.

    [USD, JPY]
    USD-JPY was on the decline through the morning session, falling from 116.35 at the open, to lows of 115.29. The softer risk backdrop weighed initially, while Treasury yields steadied under early highs, both USD-JPY negatives. Profit taking over 116 was reported, with traders citing Wednesday's Trump press conference as a factor, given the unknowns. Support now comes in at 116.21, the Tokyo low, with a break there likely to see Friday's three-week low of 115.07 targeted.

    [GBP, USD]
    Cable found support under 1.2150 through the N.Y. session, basing at 1.2143 early on. The pairing later topped at 1.2190, before drifting lower into the close. Concerns about Brexit, specifically PM May's suggestion that the government is setting a course for a "hard" Brexit, have more than offset the stellar readings of last week's December PMI surveys out of the UK. We remain cautiously bearish of Cable. Recent daily lows at 1.2199 and 1.2200 mark resistance.

    [USD, CHF]
    EUR-CHF has settled above 1.0700 after logging a two-week low at 1.0680 last week. The franc's strength against the euro, which is a proxy of the trade-weighted value of the Swiss currency, will be an ongoing concern for Swiss policymakers given the deflationary impact of franc strength, although Swiss December CPI last week lifted to 0.0% y/y from -0.3% y/y in the previous month, breaking a run of 25 consecutive months of negative prints. This compares to an average CPI rate of -0.4% y/y for 2016.

    [USD, CAD]
    USD-CAD traded on either side of 1.3200 through the morning session, basing at 1.3193, and remaining under some pressure, despite WTI crude fading into $51.20, a fresh three-week low. Canada's solid December employment report, released last Friday, shifted growth sentiment to a degree, supporting the CAD in the process. Current demand is reportedly from corporate accounts, and further erosion in oil prices should limit USD-CAD losses going forward. Friday's 1.3178 base is the next support level.

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