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By XE Market Analysis July 8, 2019 1:34 pm
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    XE Market Analysis: Asia - Jul 08, 2019

    The Dollar firmed up some in N.Y. trade on Monday, though the DXY remained below Friday's near three-week top, peaking at 97.42. There was no data to drive the market, though following the much better June jobs report, Dollar dip-buying remained in vogue, as traders priced out aggressive Fed rate cut moves. EUR-USD matched Friday's 1.1207, while USD-JPY printed 108.73 highs. USD-CAD found support as oil prices pulled back, rallying to highs just under 1.3100. Cable found support into the 1.2500 level. Focus will shift to Fed chair Powell testimony later in the week, where markets will look for fresh hints on the interest rate policy path.

    [EUR, USD]
    EUR-USD remained heavy through the N.Y. session, though mired inside of a narrow trading band. Friday's post-jobs low of 1.1207 was matched after the London close, while earlier, sellers emerged into the highs of 1.1226, and ahead of the 50-day moving average at 1.1237. Weak EU data, along with prospects for dovish tilting Lagarde to take over the ECB helm, and notched down expectations for aggressive Fed rate cuts, should keep the Euro in sell-the-rally mode for the foreseeable future. Under Friday's low, support comes at the June 19 base of 1.1187.

    [USD, JPY]
    USD-JPY printed one-month highs of 108.73, rallying out of overnight lows of 108.28. The pairing has been well bid since Friday's better U.S. jobs report, which slashed expectations for aggressive Fed easing, resulting in a spike up in Treasury yields, supportive of the Dollar. Wall Street remained under pressure through the session, which put a stop to further USD-JPY gains. The June 11 high of 108.80 is the next resistance level, followed by the psych 109.00 mark, where Japanese exporter offers are suspected to be parked.

    [GBP, USD]
    Cable settled after diving to a six-month low on Friday at 1.2481 following the U.S. jobs report. The pairing bottomed at 1.2500 in N.Y. trade on Monday. The UK data calendar is highlighted by BRC June retail sales (Tuesday) and industrial production (Wednesday). After a quiet period, Brexit will soon be back in the headlines, once a new PM has been settled on later this month. A path forward continues to be ellusive, and fresh uncertainties are liable to continue to weigh on the Pound.

    [USD, CHF]
    EUR-CHF has put in a couple of weeks of steady, range-bound trading after dropping sharply in mid June as markets adjusted to increased prospects for the ECB to return to the dovish policy tap. The cross printed a two-year low at 1.1057 before recouping to levels around 1.1100. The advance of the Franc against the Euro will be displeasing to the SNB (the EUR-CHF cross being a good proxy on the Swiss currency's trade weighted value). The SNB restated at its quarterly policy review last month that downside risks to the economy have increased, and that the overall policy setting "remains as expansionary as before." With the ECB increasingly under pressure to ease policy again, the SNB remains eager to counter Franc appreciation, especially against the Euro. Assuming the ECB remains on the path of further monetary policy easing, we would expect EUR-CHF retain a declining bias.

    [USD, CAD]
    USD-CAD was under modest pressure early in the session, trading under 1.3050, below levels seen ahead of Friday's softer Canada jobs report. The pairing had rallied over 1.3135 from 1.3060 ahead of the data. Losses were seen despite downgraded odds for aggressive Fed easing, though oil prices have consolidated near one-week highs, providing some support to the CAD. WTI crude later faded lower, prompting USD-CAD short covering. The pairing topped near 1.3100 later in the morning. Support now comes at Friday's 1.3044 low, then at Thursday's near nine-month bottom at 1.3037.

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