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By XE Market Analysis June 20, 2018 2:50 pm
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    XE Market Analysis: Asia - Jun 20, 2018

    The DXY eased back slightly in N.Y. on Wednesday, as markets overall steadied as trade war fears subsided to a degree. The dollar did find some support from comments from Fed chair Powell, who said the case for gradual rate increases us "strong". EUR-USD topped at 1.1600 early, before touching 1.1566 lows. USD-JPY ranged between 109.95 and 110.33. USD-CAD touched one-year highs of 1.3311 on ongoing NAFTA fears, while cable traded on either side of 1.3200.

    [EUR, USD]
    EUR-USD ran into sellers at 1.1600 early in the session, since making its way to 1.1566 lows following Fed chair Powell's comments on the need for gradual interest rate hiked. The pairing has since settled on either side of 1.1580 in light trade, though remain in sell the rally mode following dovish Draghi comments on Monday, when he said "we will be patient will the timing of the first and will take a gradual approach...".

    [USD, JPY]
    USD-JPY has remained range-bounds, idling inside of 109.95 and 110.22 since the open. The pairing has settled in well above Monday's 109.55 low, supported by steadier equity markets. Opposing central bank paths should continue to support dollar-yen, though given the yen's safe-haven status, bumps in the road may continue due to ongoing trade concerns.

    [GBP, USD]
    Cable closed out in London near flat on the day, around 1.3175. Markets are anticipating this week's BoE MPC meeting (which announces tomorrow) to hold policy unchanged while acknowledging a run of weaker data, the net result of which will likely be to push expectations for a 25 bp rate hike to the November MPC meeting, away from the August meeting. Brexit-related uncertainty remains in the mix. The House of Commons votes later (evening, local time) on whether to given parliament a "meaningful" vote on the eventual final terms (on divorcee and future relationship with the EU). We have been advising trend following with regard to Cable. Resistance is at 1.3230.33.

    [USD, CHF]
    EUR-CHF has settled back above 1.1500 after printing a three-week low at 1.1487 yesterday. The cross has been under pressure since the ECB's dovish guidance signal of last Thursday. EUR-CHF is now 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 the 1.33 mark for the first time in a year, peaking at 1.3311 in London morning trade. The pairing has now posted five-consecutive higher daily highs. Softer oil prices have been supportive, though a worsening NAFTA outlook remains the major driver of CAD weakness. The lack of progress in NAFTA negotiations has lowered the odds for a July BoC rate hike, also CAD negative. USD-CAD resistance now comes at 1.3339, which was the June 22, 2017 high.

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