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By XE Market Analysis July 19, 2018 2:53 pm
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    XE Market Analysis: Asia - Jul 19, 2018

    After a relatively quiet morning session, the Dollar took a hit on Trump headlines that came from a CNBC preview of an interview with him that will be released in its entirety tomorrow. In it Trump said that while he values the independence of the Fed, he must say that he's not pleased with rates going up every time we make some progress on the economy. He doesn't necessarily agree with raising rates, and is "not thrilled" by higher rates. He also took a direct shot at the weakening yuan and euro, which he said were putting the U.S. at a trade disadvantage. USD-JPY dropped from 112.86 to 112.08 lows and the euro was bid up to 1.1678 from the 1.1600 area. The USD partially recovered some losses into the close.

    [EUR, USD]
    EUR-USD has remained buoyant following Trump's "not thrilled" with higher interest rate comments that were aired from a CNBC interview. The pairing topped at 1.1678, and remains over 1.1670 currently. Of course, the Fed will remain fully independent, and continue on its gradual rate hike path, so the latest move will just give euro bears better levels to sell into.

    [USD, JPY]
    USD-JPY found some traction under 112.10, after falling from 112.85 in the aftermath of Trump voicing his dislike for higher U.S. interest rates. The pairing has since recovered to 112.49 highs, though had been due for a pullback after printing six-month highs of 113.16 earlier. Buy on dips remain in vogue, as Fed and BoJ policies remain divergent, and as U.S. economic growth remains strong.

    [GBP, USD]
    Cable fell to 1.2958 lows in N.Y. trade, levels seen last September. Yesterday's unexpected dip in core UK CPI along with today's unexpected contraction in June retail sales have been ostensibly blamed for dimming BoE tightening expectations. A more pressing concern is the sharpening Brexit negotiation process, as time starts to run out, with an EU source cited by Bloomberg today saying that the UK government's policy document, which lays out what it wants from a new relationship with the EU, is unclear

    [USD, CHF]
    EUR-CHF has settled back in the mid 1.1600s, down from the eight-week high seen earlier in the week at 1.1714. 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 printed three week highs of 1.3268 after the open, since easing back to 1.3228 lows. The CAD has perked up a bit as oil prices recovered, leaving WTI crude (September contract) near $68.50 after falling to $66.62 trend low early. The pairing later popped to three-week highs of 1.3289 in choppy trade. U.S. dollar strength in general has been supportive of USD-CAD this week.

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