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By XE Market Analysis March 20, 2018 2:27 pm
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    XE Market Analysis: Asia - Mar 20, 2018

    The dollar moved higher in N.Y. trade on Tuesday, with buyers stepping inahead of what will almost surely be a 25 basis point Fed rate hike on Wednesday. The DXY topped at 90.40, a near three-week high, and closed above its 50-day moving average, which stands at 89.95. EUR-USD opened the session near 1.2310, and made its way to 1.2254 lows. USD-JPY peaked at 1-6/60 early in the session, before settling on either side of 106.40. USD-CAD rallied to 1.3101 highs before easing to 1.3075, while cable idled on either side of 1.4000.

    [EUR, USD]
    EUR-USD printed nearly three-week lows of 1.2254, coming from 1.2310 at the open. The pairing has remained under its 50-day moving average of 1.2317 since late in the London morning session, and appears to be set to close under the level today. A softer German ZEW survey left euro sellers in charge, and with EUR/USD yields spreads favoring the dollar into and after tomorrow's expected Fed rate hike, a sell-the-rally mentality should prevail.

    [USD, JPY]
    USD-JPY has been steady through the N.Y. session, after posting a modest recovery overnight. The pairing has ranged between 106.60 and 106.34 since the open. Better risk taking levels has allowed the yen to pull back, while talk of pre-FOMC buying has been noted. Should the Fed up its dot plots to 4 tightening this year, the dollar is expected to rally.

    [GBP, USD]
    Cable followed EUR-USD lower in London morning trade, posting a low of 1.3983 with subsequent rebounds having capped out above 1.4000. Sub-forecast UK inflation data imparted a downward spin on the pound during the London morning session, offsetting the latest survey on BoE policy expectations from Bloomberg which found 21 of 41 economists forecasting a 25 bp hike in the repo rate at the May MPC meeting.

    [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 has edged back from 1.3103 highs, with sellers reportedly paring some long positions on the move over the figure, resulting in a low of 1.3082. Firmed up WTI crude has been a selling catalyst as well, with the front contract topping at three week highs of $63.66. NAFTA/trade/tariff uncertainty remains an issue however, and will limit USD-CAD downside potential for now.

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