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By XE Market Analysis June 21, 2019 2:42 pm
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    XE Market Analysis: Asia - Jun 21, 2019

    The Dollar index fell to three-month lows of 96.25 in N.Y. trade on Friday, opening the session near 96.65. Fallout from Wednesday's dovish FOMC outcome remained a driver, though Treasury yields managed small gains after stronger U.S. housing data. EUR-USD advanced to 1.1368 from early lows near 1.1300. USD-JPY traded to highs over 107.70, later falling back to 107.35, while USD-CAD found some support on softer Canada retail sales, topping at 1.3229. GBP-USD caught a bid as well, rallying over 1.2725.

    [EUR, USD]
    EUR-USD headed to three-month highs, with buying picking up steam on the break over the 200-day moving average at 1.1352. The pairing so far has topped at 1.1368, an up from session lows of 1.1309. The FOMC's dovish outcome continues to have impact on the Dollar overall, with a July FOMC rate cut fully prices into the futures market. On the other hand, the ECB has been sounding very dovish lately, with Draghi earlier this week saying further rate cuts and QE could be on the table should conditions deteriorate further. Support now reverts to the 200-day moving average, with resistance at the March 22 top of 1.1390

    [USD, JPY]
    USD-JPY rallied out of overnight near six-month lows of 107.05, peaking at 107.73 into the London close. Better U.S. housing data, along with a modest bounce in Treasury yields, helped prompt end-of week short covering. Risk-off trade during the Asian session, as U.S./Iran tensions rose, resulted in the pairing's lows. The pairing later fell into 107.35 on late week-end USD weakness. Focus next week will shift to the G-20 in Osaka, Japan, where there are high hopes that Trump and Xi will make progress on resolving the U.S./China trade war.

    [GBP, USD]
    Cable was dragged higher by EUR-USD gains in N.Y. on Friday, taking the pairing to highs over 1.2725 from pre-open lows of 1.2643.The Dollar remained under pressure overall, with the DXY dropping to three-month lows. The BoE yesterday trimmed its Q2 GDP growth estimate to 0.0% q/q from 0.2% while stating that inflation remains well anchored, although retaining guidance for gradual tightening over the three-year forecast horizon (which assumes a smooth Brexit process). While prospects for a Fed rate cut in July have helped the Pound, a messy Brexit outcome will likely offset Sterling's current advantage.

    [USD, CHF]
    EUR-CHF bounced modestly from the near two-year lows of 1.1057 seen on Thursday, though remained pressured on either side of 1.1100 as U.S./Iran tensions remained high. A last minute cancellation of a U.S. bombing run on Iran, will keeps markets on edge, and likely continue to support the safe-haven CHF. Last week's EUR-CHF drop was driven by the Swiss Franc, which rallied in the wake of the SNB policy announcement, with recent geopolitical events adding further support to the CHF.

    [USD, CAD]
    USD-CAD bounced over 1.3225 at mid-morning, up from opening lows near 1.3190, and overnight lows of 1.3163. Softer Canada retail sales helped the pairing higher earlier, though with WTI crude near the June highs of $57.97 posted ahead of the open, and the DXY touching two-month lows on the back of Fed easing potential, USD-CAD upside can be expected to remain limited. Support is at Thursday's three-month low of 1.3151,with resistance at 1.3277, representing the 200-day moving average.

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