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By XE Market Analysis July 23, 2018 3:58 pm
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    XE Market Analysis: Asia - Jul 23, 2018

    The Dollar index recovered from N.Y. session lows of 94.38, after the weaker U.S. housing data, before later peaking at 94.71. The Greenback moved up fairly broadly, seeing EUR-USD fall from 1.1727 to 1.1684, and USD-JPY rally to 111.55 from 111.10. USD-CAD headed higher on short covering and oil price weakness, while Cable briefly headed briefly under 1.3100.

    [EUR, USD]
    EUR-USD topped at 1.1727 after the weaker U.S. housing data, though has since turned to a softer footing, basing at 1.1684 in afternoon dealings. Strong U.S. growth (with whispers of perhaps a 5% print when Q2 GDP is released on Friday), and opposing policy paths from the Fed and ECB, should continue to keep the Euro in sell-the-rally mode.

    [USD, JPY]
    USD-JPY traded back above its 20-day moving average of 111.32 making N.Y. session highs of 111.54, after bottoming at 10 session lows of 110.75 overnight. Talk of potential BoJ shifts to its monetary policy was a driver of Yen strength overnight, as Reuters reported that the BoJ is in "preliminary" discussions to tweak its stimulus program to make it more sustainable. As a result of the report, JGB yields spiked by as much a 6 basis points, which supported the Yen.

    [GBP, USD]
    Cable reached the London fix with fractional losses on the day against the Dollar. Cable drifted lower after printing a four-session high of 1.3157 during the Asian session, and though later dipping under 1.3085 in Late N.Y. trade, as the Dollar recovered more broadly. The UK's data calendar this week is quiet, with the only highlights being the July releases of the CBI industrial trends and distributive sales surveys (due Tuesday and Thursday, respectively), not typically market movers. We continue to see directional risks to Cable as being greater to the downside than to the upside due to evident risk of a no-deal Brexit scenario.

    [USD, CHF]
    EUR-CHF has settled back in the 1.1600s, down from the two-month high seen last week at 1.1714. SNB's Maechler said recently 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 commáents 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 traded to intra day highs of 1.3180, up from Asian session lows of 1.3116. Profit taking was a driver this morning, following Friday's post-Canada CPI and retail sales, which were stronger than expected. Recall, the pairing fell from 1.3235 to 1.3115 on Friday, and the failure to trade under Friday's level prompted short covering. In addition, WTI crude prices retreated to near $67.60, also weighing on the Loonie.

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