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By XE Market Analysis June 27, 2019 2:49 pm
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    XE Market Analysis: Asia - Jun 27, 2019

    The DXY edged slightly higher through the N.Y. session on Thursday, taking the index to 96.29 highs from opening lows of 96.15. Wall Street bounced some, though Treasury yields remained soft. Incoming data had Q1 GDP unrevised at 3.1%, while jobless claims were a bit higher than expected. U.S./China trade hopes were dashed some as WSJ reported China would have pre-conditions for the talks. This was later shot down by NEC chair Kudlow, who said no pre-conditions existed. EUR-USD slipped from 1.380 early highs to 1.1357, while USD-JPY was range bound between 107.67 and 107.95. USD-CAD touched support at 1.3100, posting new four-month lows, while Cable bottomed under 1.24665 from over 1.2710. Markets look to the G-20 over the weekend, where trade will be the focal point. A lack of progress will likely see the Dollar rally, as safe-haven flows set in.

    [EUR, USD]
    EUR-USD remained fairly steady since the opening high near 1.1375, dipping to lows of 1.1357 at mid-morning. Softer EU confidence results dented EUR sentiment slightly, though following reports that China has some hefty demands on the U.S. to come to a trade agreement, U.S. Dollar buying on safe-haven flows may begin to pick up. Trump and Xi are set to meet in Japan on Saturday. In the meantime, the 200-day moving average at 1.1346 provided support since Tuesday.

    [USD, JPY]
    USD-JPY fell briefly under 107.70 into the London close, after peaking at 107.95 early in the session on the back of U.S./China trade talk hopes. Word that China would require preconditions for the talks weighed the pairing down later, though moved off its lows as NEC chief Kudlow said there were no pre-conditions to the talks. Wall Street gains limited the pairing's losses, though soft Treasury yields put a cap on USD-JPY. Resistance is now at the 20-day moving average of 108.08, with support at the overnight low of 107.65.

    [GBP, USD]
    Cable topped at 1.2475 into the N.Y. open, later falling to lows of 1.2664, just above Wednesday's six-day low at 1.2762. The pairing has found support near its 20-day moving average at 1.2670 since Tuesday. Sterling found a bid in London morning on news that a group of parliamentary members are working on a plan to prevent a no-deal Brexit by withholding government funding. This comes with Boris Johnson, the strong favourite to become the new prime minister, having made noises about circumventing parliament to achieve a no-deal Brexit.

    [USD, CHF]
    EUR-CHF settled into the 1.1100 mark in N.Y. trade on Thursday, though remained heavy overall, as geopolitics keep the safe-haven CHF supported. The cross remained above last week's near two-year low of 1.1057 seen on Thursday, bottoming at 1.1062 in N.Y on Tuesday. Trade concerns, and ongoing tensions between the U.S. and Iran will likely keep the CHF supported for now.

    [USD, CAD]
    USD-CAD fell to 1.3110 lows in early North American trade, coming from overnight highs of 1.3137, and in sight of Wednesday's four-month low of 1.3107. WTI crude rallied back to $59.70, up from lows under $58.70 at the N.Y. open, which has weighed on the pairing. In addition, interest rate differentials have narrowed to the CAD's advantage following last week's dovish FOMC meeting. Since the start of May, U.S./CAD 10-year spreads have come in to about 55 bps from 80 bps. USD-CAD support is now at 1.3100, with a break there expected to see the February 4 low of 1.3085 tested. USD-CAD did print 1.3100 late in the session, subsequently bouncing slightly in to the close.

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