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By XE Market Analysis January 10, 2019 2:38 pm
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    XE Market Analysis: Asia - Jan 10, 2019

    FX trade was relatively quiet in N.Y. on Thursday, though the dollar overall managed modest gains. A slightly lower than expected jobless claims outcome had little impact. Later, the dollar perked up a bit on Powell's Q&A, with EUR-USD touching session lows of 1.1485, and USD-JPY picking up to 108.45. The Fed chair again used the word "patient" with regards to monetary policy, which gave Wall Street a modest boost, helping USD-JPY higher as well.

    [EUR, USD]
    EUR-USD rally to two-plus month highs of 1.1571 fizzled during the Asian session, seeing the pairing fall back to lows of 1.1485. Weak France production data weighed on the pairing in London morning trade, while profit taking in N.Y. added to the balance of losses this morning. Given the dovish shift in the Fed outlook since Friday, EUR-USD would appear to be in buy-the-sip mode for now, though a softening Eurozone growth picture may limit Euro gains going forward.

    [USD, JPY]
    USD-JPY edged up to session highs of 108.22 in morning trade, with modest gains coming as Wall Street attempted to turn positive for the day. The pairing had bottomed at 107.93 earlier in the morning. Recent dovish commentary from Fed officials appears to have moved USD-JPY to a slightly lower trading band, as the interest rate sensitive Yen is supported by potential for fewer Fed rate hikes in the coming months. The pairing bounced to 108.45 after Powell comments, which saw Wall Street turn higher.

    [GBP, USD]
    Cable has turned sideways, as traders wait for Tuesday's UK Parliament vote on the EU Withdrawal Agreement and outline for a future relationship. The leader of the principal opposition party, Labour, has called for a general election in the event that the deal is voted down, which is looking likely to be the case. However, this is almost certain not to happen as the ruling Conservative and DUP parties won't want this, having over three years left before an election is due. Of all the possible scenarios that will open up at point that the government's Brexit deal is voted down, our best guess is that a new EU referendum will be the path of least resistance, despite elevated media talk and preparations for a no-deal Brexit scenario.

    [USD, CHF]
    EUR-CHF traded to near two-week highs over 1.1300 in N.Y. on Thursday amid a backdrop of revived risk appetite in global markets. 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 touched 1.3250 highs overnight, after dropping to one-month lows of 1.3178 in the aftermath of the BoC announcement on Wednesday. The pairing later found support into the 1.3200 level, and has since bounced over 1.3260 as WTI crude prices headed under $51.60. The risk backdrop, and oil price direction will remain determinants of direction going forward.

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