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By XE Market Analysis June 19, 2019 4:10 pm
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    XE Market Analysis: Asia - Jun 19, 2019

    FX trade was quiet ahead of the Fed, though the Dollar fell broadly after the FOMC announcement, where rates were left unchanged, as widely expected. The statement said uncertainties have increased, and "the Committee will closely monitor the implications of incoming information for the economic outlook and will act as appropriate to sustain the expansion". Previously, the Fed said it would be "patient". Markets took the outcome with a dovish lean, which saw Wall Street rally, and yields head lower. EUR-USD popped to 1.1254 from under 1.1220, as US-JPY fell to near two-week lows of 108.04 from just under 108.40. USD-CAD dropped to just under 1.3300,while Cable spiked up to 1.2673.

    [EUR, USD]
    EUR-USD printed 1.1222 highs, up from opening lows of 1.1201 ahead of the FOMC announcement. The modest rally was attributed to position adjustments ahead of the Fed, where a dovish outcome was widely expected. The statement was largely in line with expectations, and resulted in the pairing rallying to 1.1254 highs from under 1.1220.

    [USD, JPY]
    USD-JPY was range bound in morning N.Y.trade, ranging between 108.30 and 108.50 since the open, as traders were largely sidelined ahead of this afternoon's FOMC announcement. The dovish FOMC outcome saw the Greenback come under broad pressure, taking USD-JPY to 108.04 lows. JPY focus shifts to the BoJ, which will announce its policy intentions tonight. The Bank is expected to keep policy unchanged so we'll have to monitor his presser for any new insights. Last week the BoJ governor told Bloomberg the Bank had further tools in its policy toolkit, though said further stimulus was not needed currently.

    [GBP, USD]
    Cable scaled to a fresh two-day high at 1.2638 in N.Y. morning trade, as the USD came under some pre-Fed pressure. Political developments have gave the pound a leg up today, on news that Conservative Party leadership contender Rory Steward is winning support from party members who had been backing Dominic Raab, who dropped out of the race yesterday. Rory is against a no-deal Brexit, and thereby is seen by markets as a candidate more bullish for the pound compared to arch Brexiteer Boris Johnson. GBP-USD topped at 1.2673 following the dovish FOMC.

    [USD, CHF]
    EUR-CHF fell to nine-session lows of 1.1155 following dovish FOMC. Last week's drop was driven by the Swiss Franc, which rallied in the wake of the SNB policy announcement. There didn't appear to be a specific catalyst, and the SNB's message was dovish, in fact, stating that downside risks to the economy have increased and that the overall policy setting "remains as expansionary as before." The central bank also nudged its inflation forecast lower, now expecting CPI to average just 0.6% y/y this year, 0.7% in 2020, and 1.1% y/y in 2021.

    [USD, CAD]
    USD-CAD slid to a four-session low of 1.3338, down from over 1.3380 following the much hotter Canada CPI report, which saw a 0.4% m/m rise overall, taking the y/y to 2.4% from 2.0%, and the core reading to 2.3% from 2.0%. The pairing had been steady on either side of 1.3375 since Tuesday's close. Support now comes at 1.3323, Friday's low. Following the dovish FOMC, the pairing dropped to six-session lows just under 1.3300.

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