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By XE Market Analysis July 15, 2019 2:42 pm
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    XE Market Analysis: Asia - Jul 15, 2019

    The Dollar moved modestly higher in N.Y. trade on Monday, taking the DXY to highs of 96.97 from 96.75 lows seen into the open. The index remains well under last week's July high of 97.59. A better than expected Empire State index helped USD sentiment to a degree, prompting some short covering from Friday's one-week low. EUR-USD printed 1.1254 lows from a top over 1.12480 in London, while USD-JPY remained under the 108 level through the session, bottoming at 107.84. USD-CAD bounced to 1.3051 from 1.3022 as oil prices fell. Cable found support ahead of the 1.2500 level, coming from 1.2560 into the open.

    [EUR, USD]
    EUR-USD has been held between its 20-day moving average of 1.1288 and its 50-day moving average at 1.1242 since Friday, though has been trending lower since the N.Y. open. The pairing was above 1.1280 ahead of the session start, since fading to 1.1254 lows into the London close. A 25 basis point Fed rate cut at the end of the month has been priced into EUR-USD, and focus now may shift to the ECB, where further stimulus could be in the cards at its next meeting on July 25, keeping EUR-USD capped for the time being.

    [USD, JPY]
    USD-JPY remained under its 20-day moving average at 107.99, after printing seven-session lows of 107.80 during the overnight Asian session. The mixed risk backdrop limited the pairing's gains through the morning session, as Wall Street traded on either side of flat, and Treasury yields remained pressured. The July 5 low of 107.76 is the next support level.

    [GBP, USD]
    Sterling underperformed on Monday, putting Cable back in the lower 1.2500s, swinging the 27-month low seen last week at 1.2439 back into view. We remain neutral-to-bearish on the Pound given the evident impact that prolonged Brexit uncertainty, and increased risk of a no-deal exit from the EU, have had on the UK economy. The UK will have a new prime minister next week, with the Conservative Party's leadership party concluding on Tuesday. Boris Johnson is almost certain to become the new UK boss. He has been emphasizing that he is fully intent on the UK leaving the EU without a deal, hoping that this will see Brussels waiver on its red lines while maintaining that the no-deal option will be taken if necessary.

    [USD, CHF]
    EUR-CHF traded to a July low 1.1066 in N.Y. on Monday. The cross printed a two-year low at 1.1057 before recouping to levels around 1.1100 back in June. 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 traded to session lows of 1.3022, down from overnight highs of 1.3043. Higher oil prices initially weighed on the pairing, as WTI crude rallied to $60.91, just under the near two-month high of $60.94 seen last week. Later, as oil prices retreated under $59.50, USD-CAD rallied back to 1.3051 highs. Support now comes at the 2019 low of 1.3018 seen last Friday.

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