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By XE Market Analysis January 23, 2019 3:26 pm
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    XE Market Analysis: Asia - Jan 23, 2019

    The Dollar fell in N.Y. trade on Wednesday, taking the DXY to lows of the week at 96.05 from opening highs of 96.37. Trade and shutdown worries conspired against the Greenback through much of the session. EUR-USD rallied to 1.1396 from near 1.1350, as USD-JPY fell back to 109.40 after printing 110.00 highs. USD-CAD moved higher as oil prices fell, while Cable hit 11-week highs of 1.3081.

    [EUR, USD]
    EUR-USD climbed up to 1.1396 highs, advancing from near the 1.1350 level at the N.Y. open. Short covering ahead of Thursday's ECB meeting was a factor today, though Draghi is expected to sound a dovish tone at his press conference tomorrow, with the balance of risks leaning to the downside. This may well result in the Euro coming under pressure again.

    [USD, JPY]
    USD-JPY topped at 2019 highs of 110.00, with the pairing benefiting from a combination of early risk-on conditions, and a lowered BoJ inflation forecast. Talk of Japanese exporter offers in place from the 110.00 mark put a cap on the Dollar, and later, as Wall Street gave back gains, the pairing fell back to 109.40 lows.

    [GBP, USD]
    Sterling's upward realignment phase continued, with Cable posting an 11-week peak at 1.3081, which at that level was 1% gain on the day. EUR-GBP printed a two-month low at 0.8698. This is the third consecutive week that the pound has rallied against both the dollar and euro. News that the Labour Party will likely join the cross-party motion to legislate against the possibility for a no-deal Brexit scenario has lifted the pound, which we expect to be on route to the a new trading range in the mid 1.30s

    [USD, CHF]
    EUR-CHF has ebbed back to the lower 1.1300s after carving out a one-month high yesterday at 1.1347. USD-CHF is also softer after also trading at one-month highs. Recent underperformance of the Swiss franc has been accompanied by talk/suspicions of SNB intervention. SNB vice president, Zurbruegg, said that "the uncertainties concerning further developments (the world economy) have increased recently", and said that Swiss growth is expected to slow this year. He added that "the franc remains highly valued" and the situation on foreign currency markets is "still fragile." He also said that the SNB's two pillar strategy that focuses on negative interest rates and the threat of ad-hoc currency interventions "remains appropriate."

    [USD, CAD]
    USD-CAD rallied to near 1.3335 from 1.3305 following the weaker Canada retail sales outcome. The pairing had slipped from overnight highs over 1.3360 as WTI crude prices recovered to $53.64 highs into the North American open. As oil prices later fell back, USD-CAD made its way to 1.3370 highs.

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