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By XE Market Analysis March 21, 2019 2:41 pm
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    XE Market Analysis: Asia - Mar 21, 2019

    The Dollar shrugged off Wednesday's dovish FOMC result in N.Y. on Thursday, as the DXY rallied to pre-Fed levels though the session. The resiliency of the dollar was impressive given the FOMC, though this could be a case of the USD being the cleanest dirty shirt in the hamper. The DXY bounced to above pre-FOMC levels, topping at 96.63, and up from 95.74 lows after the Fed on Wednesday. EUR-USD dropped to 1.1343 from opening levels near 1.1400. USD-JPY caught a bod with Wall Street, peaking at 110.95, up from 110.40 lows. Cable fell to 1.3004 lows, as the Brexit outlook remains clear as mud. USD-CAD topped at 1.1400, on a resurgent USD, and softer oil prices.

    [EUR, USD]
    EUR-USD has been on the decline for much of the N.Y. morning session, falling from London morning highs of 1.1425, and basing so far at 1.1343. The pairing is back to pre-FOMC levels, and has been quite resilient considering the dovish shock from the Fed yesterday. Decent U.S. data today, along with general European slowing, and a perma-dove ECB should see further Euro gains contained for now.

    [USD, JPY]
    USD-JPY bounced from opening lows of 110.38, later up testing the 111.00 mark, as Wall Street turned sharply higher from opening losses. Overnight, post-FOMC USD selling continued, seeing the pairing bottom at 110.30. The brief move under the 50-day moving average of 110.35 prompted some short covering, which along with the improving risk backdrop, gave USD-JPY some upside progress through the session.

    [GBP, USD]
    Cable remained heavy, pulling back to the lower 1.3100s after a rebound from lows stalled at 1.3173. The pound is trading with an average decline of about 1.3% from week-ago levels against the dollar, reflecting the Brexit-related political chaos in the UK. Markets are still, however, sanguine to the risk of a disorderly no-deal exit from the EU, which remains the legal default at midnight next Thursday. The consensus is for sterling to plummet to 1.2000 against the dollar in a no-deal scenario. A "Revoke Article 50" petition to cancel Brexit has attracted nearly a million signatures so far. Being over 100k it means that it will at the least be considered for debate in the House of Commons, though foreign secretary, Hunt, said revoking Article 50 would be highly unlikely. As it stands, May's government is attempting to line up another vote on her Brexit deal on Monday. She is in Brussels today for the EU leaders' summit, and will be asking for an extension in the Brexit process through to 30 June.

    [USD, CHF]
    EUR-CHF fell to near two-month lows of 1.1266 in N.Y. on Thursday, after posting a two-week high last week at 1.1385. The resurgence of the Dollar after Wednesday's dovish FOMC saw EUR-USD give back all of its post-Fed gains. 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 moved to intra day highs of 1.3349 after the early mix of data, where Canada wholesale trade data were in line with expectations, and U.S. claims and Philly Fed beat consensus forecasts. The pairing had been on the rise into the North American open, coming from near 1.3300. The pullback in WTI crude prices was supportive, while the short covering backed recovery in the Greenback in general was also constructive for USD-CAD upside. The pairing later topped at 1.3400, as USD gains accelerated.

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