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By XE Market Analysis January 19, 2018 2:08 pm
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    XE Market Analysis: Asia - Jan 19, 2018

    The DXY managed modest gains in N.Y. on Friday, moving to 90.63 highs from 90.39 lows early in the session. The Softer Michigan sentiment report had little impact, nor sis prospects for about a 50-50 change of a U.S. government shut down (as of the time of this writing). EUR-USD eased from 1.2275 highs to 1.2219, as USD-JPY idled on either side of 110.60. USD-CAD made its way to 1.2480 highs from 1.2430 lows, while cable pulled back from trend highs of 1.3945 following softer U.K. retail sales.

    [EUR, USD]
    EUR-USD bottomed at 1.2219 ahead of the London close, after making its way from 1.2275 into the open. Since then, the euro has remained heavy on the back of a MNI source story suggesting QE could be extended until the end of the year, which also backs our view that the ECB is unlikely to commit to a firm end date for QE just yet. .

    [USD, JPY]
    USD-JPY was steady through the session, topping at 110.75 before pulling back to 110.51 lows. The softer risk backdrop weighed slightly, though with consensus building that the BoJ will downplay any thoughts for a rapid withdrawal of stimulus, the pairing may remain in buy the dip mode through the Tuesday policy announcement. In the meantime, this week's trading range of 11.48 and 110.20 can be expected to hold up.

    [GBP, USD]
    Cable came off the boil since logging a new post-Brexit vote high of 1.3945 during the London AM session, driven partly by a rebound in the dollar and partly by sub-forecast retail sales data out of the UK. The pairing bottomed at 1.3839 in N.Y. trade. The UK calendar next week brings January CBI surveys on industrial trends and distributive sales, the monthly labour market report, and the second estimate for Q4 GDP.

    [USD, CHF]
    EUR-CHF declined for a fourth straight session, making an eight-day low of 1.1712. This extends the correction from the 37-month high that was seen on Monday at 1.1833. The pullback follows remarks from some ECB policymakers expressing concerns about the pace of recent euro gains, which could have implications for monetary policy. This has put in a pause on the broad rally the cross has been seeing since mid last year, seen concomitantly with economic recovery in the Eurozone.

    [USD, CAD]
    USD-CAD largely shrugged off the better manufacturing shipments data earlier, and remains near session highs, trading at 1.2440, and up from London lows of 1.2401. The pairing remains in consolidation mode following Wednesday's well-anticipated BoC rate hike, and will likely settle into a lowered trading band centered on the 1.2500 level for the time being.

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