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By XE Market Analysis July 11, 2018 2:43 pm
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    XE Market Analysis: Asia - Jul 11, 2018

    The dollar index printed seven-session highs of 94.71, crossing above the 20-day moving average (94.65) in the process. EUR-USD topped at 1.1758 before sliding to 1.1668 lows. USD-JPY rallied to a six-month high of 112.05 from early lows of 110.97, in a technical move. USD-CAD slid to 1.3068 lows after the BoC hiked rates, though later rallied over 1.32 as oil prices dove 4% lower. Cable fell to 1.3201 lows, following the euro's coattails.

    [EUR, USD]
    EUR-USD apparently rallied on reports that the ECB could begin raising interest rates as soon as July of next year. Previous guidance from the Bank noted next "summer". July would be next summer, so a curious 50 point rally for EUR-USD. The pairing topped at 1.1758 , up from opening lows of 1.1700. Given the Strong U.S. growth backdrop, and the Fed's tightening posture, we recommend selling the euro into rallies. Indeed, later in the session the pairing fell to one-week lows of 1.1668.

    [USD, JPY]
    USD-JPY spiked up to six-month highs of 112.18, with the move coming on the break over Tuesday's one-plus month highs of 110.35. In addition, buy-stops were noted above 110.41, which was the May 22 top. Resistance is now at 112.78, the January 11 top.

    [GBP, USD]
    Cable traded with little direction through the morning session, consolidating losses seen Monday. The pair closed in London at 1.3250, though later followed EUR-USD lower, and eventually bottoming at 1.3201. Brexit remains front and center.

    [USD, CHF]
    EUR-CHF has settled to the lower 1.1600s after yesterday posting seven-week high at 1.1659. SNB's Maechler said late last month that the franc "remains highly valued" despite the depreciation seen over the last year, arguing that "we are in extraordinary times and we are using unconventional measures." The comments affirm that the SNB is firmly on hold, with Maechler admitting that the SNB's monetary policy room for manoeuvre is "necessarily" affected by the actions of ECB and Fed.

    [USD, CAD]
    USD-CAD fell to 1.2079 lows from near 1.3145 following the near universally expected BoC 25 basis point rate hike. The pairing had topped at 1.3174 highs ahead of the North American open, as oil prices eased. The bank's statement said "higher interest rates will be warranted to keep inflation near target and will continue to take a gradual approach, guided by incoming data". The next support level comes at 1.3064, representing Monday's low. The pairing later more than reversed losses, climbing back to seven-session highs of 1.3183, after dropping to 1.3066 following the rate hike. The near 5% slide in WTI crude was the driver of the considerable USD-CAD rally.

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