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By XE Market Analysis June 29, 2018 1:30 pm
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    XE Market Analysis: Asia - Jun 29, 2018

    The DXY was fairly steady through the morning session, though lost some ground in afternoon trade. The dollar index dropped to 94.55 lows from a high of 94.90. Incoming U.S. data was mixed, though had little impact on market overall. Month and quarter end activity was the main driver in the FX market on Friday. EUR-USD ranged between 1.1629 and 1.1682. USD-JPY made a two-week high of 110.88, as USD-CAD fell on better data and stronger oil prices, bottoming at 1.3134. Cable topped the 1.3200 mark.

    [EUR, USD]
    EUR-USD took another jag higher, topping at 1.1682, a four-session high. The move came after the pairing ramped up over 100 points overnight. Overnight gains came following news on immigration from the EU summit in Brussels, where plans for better migrant screening and border control were agreed to. The latest rally in N.Y. came from London month/quarter-end buying, which stepped in on the move above the previous intra day high of 1.1665.

    [USD, JPY]
    USD-JPY printed two-week highs of 110.88 into the London close, before easing back to the 110.70 level. Risk taking appetite has supported since the N.Y. open near 110.50. USD-JPY remains in a broadly choppy, sideways range, which has been unfolding over the last six weeks. More of the same looks likely, with fundamentals (Fed versus BoJ policy paths) bullish but offset by the risks stemming from a deepening and prolonged trade war among major economies, a backdrop that has the Japanese currency in demand as a safe haven.

    [GBP, USD]
    Sterling lifted out of lows after BoE Chief Economist Haldane justified his decision to join the ranks of MPC dissenters in voting for a rate hike at the policy meeting last week. This provided a trigger of inter bank and short-term speculative accounts to trim sterling short positions after a period of underperformance. Cable rose back above 1.3100, putting in some distance from the seven-month low that was printed at 1.3050. However, price action this week marked a resumption of the bear trend that's been unfolding since mid April, from levels above 1.4350. This reflected rekindled Brexit discount. Major and minor businesses (including Airbus), warned the government this week to get a move on with regard to assuring that there will be a smooth post-Brexit customs border, and things have been coming to some sort of a head into today's EU leaders' summit amid reports that many EU nations have been intensifying work on contingency plans for a no-deal scenario.

    [USD, CHF]
    EUR-CHF traded briefly over 1.1600 in n.Y on Friday, as EUR-USD topped near 1.1700, though still near the midway mark of the sideways range that's been seen over the last month. SNB's Maechler said this week that the franc "remains highly valued" despite the depreciation seen over the last year. He argued that "we are in extraordinary times and we are using unconventional measures. And with inflation in positive territory we are very happy about it". The the comments affirm that the SNB is firmly on hold, with Maechler admitting that the SNB's monetary policy room for maneuver is "necessarily" affected by the actions of ECB and Fed.

    [USD, CAD]
    USD-CAD fell from 1.3260 to 1.3134 lows following the Canadian data, which revealed better April GDP and warmer IPPI and RMPI outcomes. Today's GDP print keeps a July BoC rate hike on the table. Strong oil prices and today's data have seen the pairing fall 200 points from Wednesday's one-year high of 1.3387. WTI crude printed three-plus year highs of $74.42.

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