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By XE Market Analysis July 2, 2019 2:56 pm
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    XE Market Analysis: Asia - Jul 02, 2019

    The Dollar was narrowly mixed in N.Y. trade on Tuesday, though managed to keep the bulk of Monday's gains. There was no data to move the markets, though that will change on Wednesday, as traders gear up for the ADP jobs report, trade, jobless claims, and factory data. EUR-USD was range bound between 1.1286 and 1.1312, while USD-JPY hot 107.77 lows, down from near 108.30 at the open. USD-CAD remained above the 1.3100 level, though was unable to bounce much despite sharply lower oil prices. Cable hit the skids again, dropping to two-week lows of 1.2584. Further Dollar consolidation can be expected into Wednesday's data slate.

    [EUR, USD]
    EUR-USD plied a narrow 1.1286 to 1.1312 range since the N.Y. open. The pairing was unable to test the near two-week low of 1.1275 seen during the Asian session, despite the softer EU PPI data released earlier. On the central bank front, there has been talk that current IMF chief Lagarde may be tapped for the ECB presidency when Draghi leaves in October. Lagarde is considered a more dovish pick compared to Germany's Weidmann, who has also been in the running for the top ECB job. This talk apparently supported EGB yields this morning, perhaps adding some weight to the Euro. Incoming EU price data remains soft, which should ramp up further ECB easing speculation, not friendly to the Euro's prospects.

    [USD, JPY]
    USD-JPY printed intra day lows of 108.13, coming from overnight highs of 108.47 seen in Asia. With exuberance over the U.S./China trade truce fading, Wall Street under some early pressure, and Treasury yields unable to make gains, the pairing has come under some pressure this morning. Support was at the 20-day moving average of 108.08, then at the psych 108.00 level, though later in the session, both gave way, with sell-stops reportedly tripped just under the figure.

    [GBP, USD]
    Sterling has made a return to underperforming ways after Monday's underwhelming UK June PMI data and prolonged Brexit uncertainty, along with slowing growth on continental Europe impacting the UK economy. Cable today extended to a two-week low at 1.2584. Given the waning in Fed easing expectations away from a 50 bp move as soon a next month, the Pound is likely to remain downwardly biased against the Dollar. Brexit remains in the background for now, but that will change once the new U.K. prime minister is installed (likely Johnson) in mid-July. Until then, Sterling remains in sell-the-rally mode.

    [USD, CHF]
    EUR-CHF pulled back from two-week highs of 1.1172 in N.Y. trade on Tuesday, though later falling back into 1.1125, though remaining firmer following the U.S./China trade truce agreed over the weekend. The outcome went some way to calm the global fear backdrop, allowing the CHF to unwind some of last week's safe-haven gains. CHF buying was noted into the weekend, as a safety bet ahead of the Trump/Xi meeting in Japan. Ongoing trade concerns, and tensions between the U.S. and Iran will likely keep the CHF somewhat supported for now.

    [USD, CAD]
    USD-CAD held onto the 1.31 handle overnight, bottoming at 1.3109 in London morning trade, before bouncing over 1.3130. The pairing found support on general USD strength, with the DXY largely holding on to gains seen on Monday. In addition, the sharp oil price rally appears to have run out of steam for now, seeing WTI crude slide under $57, a more than $3/bbl drop from Monday's six-week high over $60.20, keeping the oil-sensitive CAD under some modest pressure. USD-CAD can be expected to consolidate into Wednesday's twin U.S./Canada trade reports, and Friday's U.S./Canada key employment data.

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