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By XE Market Analysis January 10, 2020 2:14 pm
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    XE Market Analysis: Asia - Jan 10, 2020

    A softer U.S. December employment report dented the Dollar in N.Y. trade on Friday, as a miss in both non-farm payrolls and earnings weighed. There was some pre-weekend paring of long Dollar positions in play as well. Markets calmed some, as Iran and the U.S. appeared to pull back from the brink following tit-for tat missile attacks. It remains to be seen how things plays out, though the situation was relatively calm into the weekend. EUR-USD headed to 1.1129 highs for two-week lows of 1.1086. USD-JPY bottomed at 109.43, down from 109.65. USD-CAD fall to 1.3027 from near 1.3070 after the sharp drop in Canada's unemployment rate. Cable struggled, dropping under 1.3045 from 1.3096 highs.

    [EUR, USD]
    EUR-USD has benefited from some pre-weekend short covering, at the end of a week that saw the pairing touch lower daily lows for four consecutive sessions. The Euro bottomed at better than two-week lows of 1.1086 into the N.Y. open, since rallying to 1.1129 into the London close. USD's yields advantage, should keep EUR-USD gains contained for the time being. The low on December 20 at 1.1065 is the next support/target level, with the 200-day moving average at 1.1141 providing resistance.

    [USD, JPY]
    USD-JPY was pushed back from 109.69 highs, after failing to take out the December highs. Strong resistance was expected at 109.72-73, representing the highs from December 13 and December 2, respectively, and indeed, the pairing has pulled back to 109.45 lows, largely driven by Wall Street moving of its earlier highs, and Treasury yields heading lower following the softer U.S. jobs report. With the U.S./China phase one trade deal expected to be signed as early as next week, when vice-premier Liu he in Washington, along with relative calm in the mid-east, USD-JPY upside remains on the radar screen.

    [GBP, USD]
    The Pound settled after diving following remarks from BoE Governor Carney, who, despite noting some early signs of improvements since last month's election, described economic growth as remaining below potential while disclosing that members have been discussing stimulus. This comes with two MPC members, Saunders and Haskell, having voted for 25 bps rate cuts at the last two policy meetings. Cable hit a two-week low at 1.3012, since settling near 1.3050. The reality of the UK government having to work out trade deals that would match pre-Brexit benefits, a process likely to take years, should keep a cap the pound's upside potential.

    [USD, CHF]
    EUR-CHF held above the 30-plus month lows of 1.0782 seen on Wednesday after Iran's missile strike on U.S. bases in Iraq. The cross managed a 1.0811 highs, as geopolitical fears faded some. The selling on Wednesday was driven by the Franc's safe-haven status, coming on the back of geopolitical fears in the mid-east. As geopolitical fears faded, the cross headed up to 1.0831 highs on Friday.

    [USD, CAD]
    USD-CAD fell to 1.3027 following the twin U.S./Canada employment reports early in the session. U.S. NFP and earnings figures missed the mark, while Canada's job rose, but a bit less than expected. The unemployment rate however, slipped to 5.6% from 5.9%, supporting the CAD.The Loonie was under pressure for much of the week however, lifting from 1.2954 lows on Tuesday, to 1.3105 highs on Thursday. The pressure on the CAD came largely after WTI crude shed as much as 10% this week, on the back of mid-east tensions.

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