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By XE Market Analysis January 31, 2019 3:06 pm
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    XE Market Analysis: Asia - Jan 31, 2019

    The dollar steadied early in the session, after the DXY bottomed at 95.22 overnight, though headed higher from there, largely on short covering interest, and solid U.S. housing data. Wall Street was mostly higher, as the Powell Put remained in focus. EUR-USD fell from near 1.1500 to 1.1435 lows, while USD-JPY bounced from 108.54 to 108.90 highs. USD-CAD bucked the trend to a degree, remaining heavy as oi prices moved to nine month highs. Cable attempted to rally, though was pushed back from 1.3160 to just under 1.3100.

    [EUR, USD]
    EUR-USD eased to 1.1435 lows after the London close, coming from near 1.1500 at the open. The pairing lost some ground on stronger U.S. home sales data, though following the dovish FOMC statement on Wednesday, buyers stepped in just under the 1.1443 100-day moving average. Softening EU data, along with a Fed on hold for now, could result in continued trade inside of familiar ranges.

    [USD, JPY]
    USD-JPY topped out at 108.90, up from two-week lows of 108.50 seen early in the session. Better risk taking levels have largely remained in place following the dovish Fed statement on Wednesday, which has provided some recent support to the pairing. Bigger picture, the Dollar is likely to remain under pressure as the Fed remains "patient" on policy.

    [GBP, USD]
    Cable bottomed at 1.3098 in early N.Y. before rallying to 1.3160 highs. From there, as the Dollar generally firmed, the pairing fell back toward 1.3100 after the London close. On Brexit, PM May her allies have been utilizing the threat of a chaotic no-deal exit for negotiating leverage, but it's reasonable to think that she -- who voted for the UK to remain in the EU at the referendum in 2016 -- and the vast majority of members of parliament will ultimately ensure a no-deal scenario doesn't become a reality. Unless the EU concedes on the Irish backstop (very unlikely), or unless Parliament musters up sufficient consensus for an alternative Brexit plan, which would necessarily be of the softer variety (possible), a new referendum would be the most likely destination.

    [USD, CHF]
    EUR-CHF clocked a new 10-week high at 1.1437, with late gains coming as EUR-USD raved higher following the dovish FOMC statement. This extends a phase of relatively high volatility that the franc has seen, which has seeing several periods of pronounced underperformance, which have often been accompanied by talk/suspicions of SNB intervention. SNB Chairman Jordan said last week that "current monetary policy is the right one and we will continue to with it for some time." He said that for 2019 the biggest concerns are "political mistakes," pointing to the U.S.-China trade war and "Brexit and the European situation."

    [USD, CAD]
    USD-CAD stayed down overnight, after printing better than two-month lows of 1.3116 on Wednesday. Firm oil prices along with a dovish FOMC outcome drove the pairing lower, though into this morning's Canada GDP data, short covering has lifted USD-CAD over 1.3145. USD-CAD made its way to 1.3163 highs in the aftermath of the price and GDP data, with short covering continuing after the two-plus month lows seen on Wednesday. Later, WTI crude prices were on the rise over $55, which put a near term cap on USD-CAD.

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