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By XE Market Analysis March 13, 2018 2:50 pm
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    XE Market Analysis: Asia - Mar 13, 2018

    The DXY fell to four-session lows in N.Y. on Tuesday, largely the result of a benign U.S. February CPI outcome, which tempered Fed rate hike concerns to a degree. The dollar index fell from 90.01 to lows of 89.59 through the morning session. EUR-USD rallied from 1.2335 to 1.2407. USD-JPY meanwhile, dropped from 107.28 to a low of 106.49, before recovering to near 106.70. USD-CAD rallied to 1.2946 from 1.2831 lows on BoC governor Poloz comments, where he said the Bank would remain cautious on the policy front. Cable topped at two-week highs of 1.3994.

    [EUR, USD]
    EUR-USD printed the 1.2407 mark, its highest in four sessions. The pairing got an early boost from the benign U.S. inflation report, and remained supported on the mixed risk backdrop. Last week's 1.2445-48 highs should mark resistance now, with support seen at 1.2342, which is the 20-day moving average.

    [USD, JPY]
    USD-JPY topped at two-week highs of 107.28 into the U.S. CPI data, before falling to lows of 106.72. The pairing bounced to 107.12 as Wall Street opened higher, though with stocks now rolling over into the red, dollar-yen has pulled back under 106.90. Support comes in at the 20-day moving average of 106.62.

    [GBP, USD]
    The pound posted gains today versus the dollar. Cable has logged a two-week high at 1.3988. The benign U.S. CPI report brought GBP buyers in, as the Fed's rate hikeexpectations were cooled a bit. Brexit-related noise continues apace, though without producing clear directional leads. The EU leaders' summit on March 22nd-23rd is the next key date, which will be the venue where the EU 27 will look to sign off on group guidelines on forming a future trading deal with the UK.

    [USD, CHF]
    EUR-CHF steadied on either side of 1.1700, taking a break from gains seen over the last week, after clocking a six-week high at 1.1745 on Thursday. The break higher has tracked a broader rebound in the common currency, with markets finding some relief as the new political picture starts to emerge following the Italian election on Sunday. While the results were messy, and brought Eurosceptic parties to the fore, the general view is that neither the euro or the EU will face an existential crisis. The EUR-CHF cross, which rallied some 10% from mid last year, has been emblematic of the euro's recovery over the last year, with the franc unwinding latent safe haven premium as existential uncertainties under the Eurozone and EU come off the boil. Former resistance is at 1.1563-65 now reverts as support.

    [USD, CAD]
    USD-CAD fell from 1.2875 to 1.2831 lows following the tepid U.S. CPI data, since recovering to 1.2857 highs. The generally softer greenback allowed WTI crude prices to recover from session lows, which kept USD-CAD gains limited ahead of Poloz's speech. The pairing later rallied to four-session highs of 1.2946 from 1.2850 in the aftermath of BoC Governor Poloz prepared remarks, where he reiterated the Bank's cautious outlook on the interest rate front. A subsequent slide in oil prices provided support into the close.

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