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By XE Market Analysis July 13, 2018 2:15 pm
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    XE Market Analysis: Asia - Jul 13, 2018

    The dollar index lost ground in N.Y. trade on Friday, though had come from two-plus week highs of 95.24, on its way to 94.78 lows. Incoming data was mixed, with import prices lower, export prices highs, and a slip in the Michigan consumer sentiment index. EUR-USD opened near 1.1625, and later topped at 1.1676. USD-JPY eased back from six-month highs of 112.80, dipping to 112.34. USD-CAD pulled back on firmer oil prices, while cable recovered after the Trump/May press conference seemed to have calmed the seas.

    [EUR, USD]
    EUR-USD posted an 11-day low at 1.1613 in London morning trade, printing four consecutive lower daily lows. Buyers returned in N.Y. however, taking the pairing to 1.1677 highs. We expect EUR-USD's downside tilt to persist for now, with strong U.S. economic growth and the Fed's tightening course tipping the fundamental balance in favor of the dollar.

    [USD, JPY]
    USD-JPY printed another six-month high (the third day in a row), topping at 112.80. Once again, risk-on conditions, and expectations for a solid Q2 corporate earnings reporting season have supported, though the pairing's N.Y. range was a narrow 112.57 to 112.34. The January high of 113.19 is the next resistance level, though Japan exporters are rumored to be parked at 113.00.

    [GBP, USD]
    Cable recovered from an 11-day low of 1.3103 to 1.3224 in N.Y afternoon trade, reversing intraday losses, despite BoE Deputy Governor Cunliffe saying that interest rates should have a "stodgy" response to signs of economic recovery, suggesting that a rate hike at next month's MPC meeting is not a done deal. President Trump's apparent walking back of his criticisms of Prime Minister May seemed to inspire some squaring out of short sterling positions.

    [USD, CHF]
    EUR-CHF printed a seven-week high of 1.1708, despite concurrent heaviness in EUR-USD. 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 peaked at 1.3209 into the north American open, later pulling back to 1.3159 lows, as oil prices recovered over the $71.00/bbl mark. With the BoC rate hike behind us, the CAD will likely resume its sensitivity to oil prices going forward.

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