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By XE Market Analysis March 20, 2019 4:09 pm
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    XE Market Analysis: Asia - Mar 20, 2019

    The dollar fell following the FOMC announcement, where rates were left unchanged as expected. The dot-plot signaled no further rate increases this year, and one 25 basis point rise in 2020. The Fed revised 2019 inflation lower, and said it will end its balance sheet reduction in October. EUR-USD spiked over 1.1440 from 1.1355, while USD-JPY fell under 110.70 from 111.50. Wall Street recovered earlier losses, and yields headed lower. Elsewhere, USD-CAD sagged under 1.3260, as Cable recovered over 1.3250 from pre-Fed levels of 1.3165.

    [EUR, USD]
    EUR-USD printed six-week highs of 1.1444 following the dovish FOMC outcome. The pairing had been idling near 1.1350 ahead of the Fed. Given the Fed's dot-plot moving to zero hikes for the remainder of this year, and lowered inflation and growth expectations, the Dollar may be in for some difficulty going forward. The euro's next upside target will be the 200-day moving average, currently at 1.1483.

    [USD, JPY]
    USD-JPY fell to better than three-week lows of 110.60 from 111.50 after the Fed was about as dovish as could be expected. Tumbling Treasury yields weighed on the pairing, though the rebound on Wall Street offset the move to a degree. From here, the next downside target will be the 50-day moving average, currently at 110.31.

    [GBP, USD]
    Cable turned lower in N.Y. morning trade, bottoming at 1.3147 after a leaked paper that confirmed reports indicating that the EU would strongly oppose a long extension in the Brexit process. The BBC, among other media sources reported that Brussels views Prime Minister May as having failed to support a credible process that would allow parliament to find a cross-party solution after her own deal failed twice to win sufficient support to pass. This ups the ante in Westminster and breaks what had been a sanguine attitude in markets about the risk of a disorderly no-deal Brexit. The Pound later rallied to 1.3250 following the dovish FOMC outcome.

    [USD, CHF]
    EUR-CHF settled lower, in the mid 1.1300s, after posting a two-week high last week at 1.1385. The cross has continued on a relatively choppy path, the latest phase of which have been the current rebound after sharp Euro declines following the ECB's lending move last Thursday. The Swiss central bank is widely expected to keep policy on hold when it meets Thursday. Growth forecasts across Europe are being revised down and the ECB has turned very cautious and not only pushed out the timing of the first rate hike, but also announced further liquidity measures. Coupled with Brexit uncertainty and a risky geopolitical outlook this pretty much ties the SNB's hand.

    [USD, CAD]
    USD-CAD hit the skids after the dovish Fed, dropping to 1.3258 lows from late morning highs over 1.3345. An added bonus for the CAD was WTI crude spiking to fresh four-month highs over $60.25, which came following a very bullish EIA weekly inventory report. With the Fed now on hold through the remainder of the year, the USD is liable to remain under pressure for the time being.

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