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By XE Market Analysis March 19, 2018 3:26 pm
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    XE Market Analysis: Asia - Mar 19, 2018

    Stock markets on both sides of the Atlantic took a beating on Monday. Reports that Facebook users' data was used by a political advertising firm weighed heavily on the tech sector, taking FB stock down as much as 8%. Yields were lower on the risk-off backdrop, and the dollar fell broadly as well. The DXY gave back most of the gains it won late last week, bottoming at 89.80 and closing under both its 20- and 50-day moving averages. EUR-USD topped at 1.2351, after opening at 1.2276. USD-JPY bottomed at 105.78, while USD-CAD slipped to 1.3047, then briefly reclaimed the 1.31 handle. Cable eased back from one-month highs of 1.4088, bottoming at 1.4040 at the close.

    [EUR, USD]
    EUR-USD was lifted to intra day highs of 1.2351, rallying from N.Y. lows of 1.2276. The move came on hawkish ECB comments. Reuters reported that ECB policy makers see the debate shifting from the guidance on QE and asset purchases to interest rates. The pairing remained bid into the close, though ahead of Wednesday's FOMC announcement, upside progress is expected to be limited. A 25 basis point hike has been fully priced in for Wednesday, but focus will be on the dot plot, and whether or not it shifts to 4 hikes this year from 3 previously.

    [USD, JPY]
    USD-JPY bottomed at 105.78 lows earlier, holding above the overnight base of 105.58, before attempting to reclaim the 106 handle. Risk-off conditions were behind the losses, though short covering has been in play since the London close. The pairing has printed four consecutive sessions of lower daily highs, and has been unable to test its 20-day moving average, currently at 106.54 in that time. Selling into rallies appears to be the game for now.

    [GBP, USD]
    Cable came off its one-month high of 1.4088 into the London, as profit taking stepped in. The CBI, a UK business lobby, summed up the market mood with its welcome of the EU and UK agreement of a 21-month transition deal, saying that it gives the "gift of time" and is a victory of "common sense." The agreement, announced earlier in a joint press conference of the respective lead EU and UK negotiators, has lessened the odds for a no deal or "cliff edge" scenario.

    [USD, CHF]
    EUR-CHF has settled in a narrow-ranged consolidation near the 1.1700 level following the early-March break higher from sub-1.1500 levels. A seven-week high was logged last Thursday at 1.1741. The SNB yesterday announced unchanged policy, as had been widely anticipated, while reaffirming its commitment to monetary stimulus to keep what it still considers a richly-valued currency on a back foot. EUR-CHF 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. Even though Eurosceptic parties won about 50% of the vote in Italy's recent general election, there forming political alliance, led by La Lega, has said Italy will remain in the EU and retain the euro.

    [USD, CAD]
    USD-CAD retreated from nine-month highs of 1.3125, bottoming at 1.3047 before attracting buyers. The move lower came on the back of reports saying that NAFTA negotiations may be picking up pace toward an agreement. The pairing will continue to react to trade news.

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