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By XE Market Analysis January 14, 2020 2:51 pm
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    XE Market Analysis: Asia - Jan 14, 2020

    The Dollar was on a marginally softer footing in N.Y. trade on Tuesday, though narrow ranges were pretty much the rule. U.S. December CPI was a tenth cooler on the core reading, though had little impact on the FX market, though Treasury yields moved lower, and Wall Street was mixed. Wednesday's U.S. calendar features December PPI and the January Empire State index. EUR-USD rallied out of 1.1105 early lows, later turning sideways just over 1.1130. USD-JPY peaked at 1.1011, before printing 109.86 lows, while USD-CAD dipped from 1.3080 to 1.3046. GBP-USD recovered from near three-week lows of 1.2954, topping at 1.3031 in N.Y.

    [EUR, USD]
    EUR-USD recovered from early lows of 1.1105 seen early in the session, trading to 1.1133 highs before turning sideways after the London close. The pairing has recovered some from last week's losses, with Friday's softer U.S. employment report providing some support, though will need to close above its 200-day moving average at 1.1139 to turn the technical outlook positive for the Euro. Support remains at last week's low at 1.1085.

    [USD, JPY]
    USD-JPY was stuck near the seven-plus month of 110.14 posted overnight, though upside progress has been capped by reported Japanese exporter selling. Moderately risk-on conditions limited downside through the session, resulting in a relatively narrow 110.07 to 109.86 trading band since the open. The next upside target is the May 21 high of 110.69.

    [GBP, USD]
    Cable hit a 19-day low at 1.2954 printing five-straight days of losses before perking up to 1.3031 after the London close. The Pound has remained heavy in the wake of Monday's UK November production and GDP data misses, and dovish BoE-speak. The implementation of post-Brexit border systems in Northern Ireland has also become an issue, while the 11 month time frame prime minister Johnson has allowed for trade negotiations before leaving the transition period is insufficient. The UK's OIS market is implying about 50-50 odds for such as rate cute this month, and is fully discounting such a move by September. We expect the pound will retain a downward bias for now.

    [USD, CHF]
    EUR-CHF hit fresh 32-month lows of 1.0760 in N.Y. trade. The cross managed a 1.0834 high on Monday, as geopolitical fears faded some, though comments from a Swiss finance official, who said "It's to be stressed that Switzerland doesn't manipulate its currency in any way to achieve an adjustment in its balance of payments or an unjustified competitive advantage", gave the market license to buy the Franc.

    [USD, CAD]
    USD-CAD topped at four-session highs of 1.3079, up from Asian lows of 1.3047. Support has come from weak oil prices, as WTI crude hit fresh one-month lows of $57.74 during the London morning session. The pair tested overnight lows in light afternoon trade. Oil prices and risk taking levels will continue to drive USD-CAD direction. There is no Canadian data of note this week, though next week brings manufacturing and CPI figures, along with the BoC meeting, where no policy changes are expected.

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