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By XE Market Analysis July 17, 2019 3:15 pm
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    XE Market Analysis: Asia - Jul 17, 2019

    The Dollar turned modestly lower through the N.Y. morning session, pulling back from one-week highs seen on Tuesday. The DXY bottomed at 97.17, after opening at session highs of 97.37. Softer U.S. housing starts data weighed some on the Greenback, as did a pullback in Treasury yields. EUR-USD ranged between 112.10 and 112.30, closing near the highs, while USD-JPY bottomed just over the 108.00 mark, coming from highs of 108.32. USD-CAD ranged between 1.3080 and 1.3035. Cable opened near 1.2400, later heading to 1.2455 highs. The USD is largely priced in for a 25 basis point Fed rate cut at the end of the month, and recent ranges will likely hold up until the FOMC announcement on July 31.

    [EUR, USD]
    EUR-USD recovered slightly from seven-session lows of 1.1200 seen in London morning trade, peaking at 1.1233 into the London close. Short covering at the 1.1200 mark was reported, while softer U.S. housing data, and lower Treasury yields supported as well. Brexit concerns have weighed on economic activity on the continent as well as the U.K., and could limit Euro gains going forward. Risk for the EUR comes from the ECB as well, with a shift to an explicit easing bias expected by many at next week's meeting, or at subsequent meetings. EUR-USD support comes at the July 9 low of 1.1193, with resistance at the 50-day moving average at 1.1244.

    [USD, JPY]
    USD-JPY headed to intra day lows in morning trade, printing 108.02, and down from earlier highs of 108.32. The pairing took its cue from Wall Street, which turned narrowly mixed performance ahead of the open, into sharper losses in late morning trade. Treasury yields edged lower as well, adding additional pressure to USD-JPY. The 20-day moving average, currently at 107.98 is the first support level, followed by Tuesday's low of 107.82.

    [GBP, USD]
    Sterling has settled higher after posting fresh trend lows against the Dollar. Cable posted a 27-month low at 1.2382, extending a distinct bear trend that Pound has been enduring since early May. This comes with the deleterious economic effects of prolonged Brexit-related uncertainty having become increasingly palpable, with the UK economy now in a state of stagnation. Markets have also been factoring increased odds for a no-deal Brexit as Boris Johnson heads to a more-than-likely victory in the Conservative Party's leadership context.

    [USD, CHF]
    EUR-CHF recovered from a two-year low of 1.1056 seen in N.Y. on Tuesday, coming on the back of weak Germany ZEW figures, which weighed on the Euro, helping the cross lower. The pairing advanced to 1.1110 overnight, though faded again on General Euro weakness. 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 initially dipped to 1.3055 from 1.3065, then topped near 1.3080 following the cooler Canada CPI outcome, and the less than forecast improvement in manufacturing shipments. The pairing had been on the decline overnight, falling from over 1.3090 on a partial recovery of Tuesday's sharp drop in WTI crude prices. Oil moved up to $58.36 highs from $57.08 lows on Tuesday. USD-CAD later bottomed at 1.3035, before moving higher as oil prices again headed lower. The 20-day moving average at 1.3104 marks resistance for USD-CAD.

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