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By XE Market Analysis June 15, 2018 3:44 pm
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    XE Market Analysis: Asia - Jun 15, 2018

    Yields fell, stocks fell, as did the dollar in N.Y. on Friday. The announcement of U.S. tariffs on China imports was greeted with China saying it would impose matching tariffs on U.S. goods. Commodities were lower, as those markets began pricing in a full-bore trade war. EUR-USD traded between 1.1582 and 1.1627, while USD-JPY bottomed at 110.110.42 before bouncing to 110.65. USD-CAD traded to neat one-year highs of 1.3201. Cable topped at 1.3287.

    [EUR, USD]
    EUR-USD topped at 1.1627 and his since turned sideways, continuing to find support over 1.1600. The threat of a full-blown trade war has weighed on the greenback going into the weekend, following a tit-for-tat exchange between the U.S. and China, while Europe is set to retaliate over U.S. imposed sanctions on metals. EUR-USD remains sharply lower on the week however, closing last Friday at 1.1770, after diving to June lows of 1.1543 following the ECB announcement on Thursday.

    [USD, JPY]
    USD-JPY rallied to better than three-week high of 110.90 overnight, after the BoJ lowered its inflation projection following a widely-anticipated decision to leave monetary policy settings unchanged at its meeting today. The new inflation forecast underlines the chronic undershooting of the inflation target and points to ongoing ultra-accommodative policy. The pairing later pulled back to 110.38 lows, and has traded within 110.40 and 110.75 since the N.Y. open. Lower Treasury yields and risk-off conditions have capped the pairing.

    [GBP, USD]
    Cable topped at 1.3298 into the London close, with pre-weekend short covering supporting. The pairing found support into the May 29 low of 1.3205, though with Brexit concerns still alive and well, we expect a test of this lvel in the coming sessions.

    [USD, CHF]
    EUR-CHF dropped to a 10-day low of 1.1525 following the ECB's dovish guidance, down from levels above 1.1600. This returns the cross to about midway levels of the range that's been seen over the last three weeks. The ECB's policy stance should ensure that the SNB remains resolutely committed to its ultra-accommodative monetary policy setting in an attempt to ward off, or at least limit, franc gains against the euro.

    [USD, CAD]
    USD-CAD topped at nearly a one-year high of 1.3201, with the loonie plagued by a number of negatives today. Soft Canadian manufacturing data, a plunge in oil prices, and a decidedly ugly global trade backdrop have weighed heavily on the CAD. Some profit taking was noted at the psychological 1.3200 level, taking the pairing back to 1.3165 lows.

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