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By XE Market Analysis May 15, 2018 2:34 pm
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    XE Market Analysis: Asia - May 15, 2018

    The DXY surged to 2018 highs in N.Y. trade on Tuesday, with the dollar taking its cue from decent incoming U.S. data in the form of retail sales and Empire State index, and the resultant pop in Treasury yields to multi-year highs. The higher yields spooked Wall Street, which was sharply lower. EUR-USD fell to trend lows of 1.1820 before bouncing, while USD-JPY topped at 110.38, also trend highs, despite the risk-off backdrop. USD-CAD headed up to one-week highs of 1.2925 as WTI crude oil shed $1.50/bbl. Cable recovered some from 2018 lows of 1.3451.

    [EUR, USD]
    EUR-USD printed a one-week lows of 1.1844, as the dollar overall benefits from USD-friendly widening of interest rate spreads. Euro support comes in now at 1.1822, which was last week's 2018 low. Bids are expected into the 1.1800 level. The pairing later bounced over 1.1870 after the housing and inventory data, and after printing fresh trend lows of 1.1820. Short covering was the motive.

    [USD, JPY]
    USD-JPY managed to rally to levels last seen on February 2, topping at 110.38. Gains came despite the risk-off backdrop, though the story for the dollar today has been the pop in Treasury yields, to multi-year highs. The February 2 top of 110.48 now marks resistance.

    [GBP, USD]
    Cable firmed up some on UK labor data for March, which showed expected perkiness in pay growth, and a data-series low in the unemployment rate. As the dollar rallied broadly however, cable turned lower, eventually bottoming at 1.3451, a 2018 low.

    [USD, CHF]
    EUR-CHF hit a one-month low of 1.1848 on Tuesday, as EUR-USD fell to 2018 lows. The cross had edged out a one-week high of 1.1963 on Monday as SNB Vice Chairman Zurbruegg told Schweiz am Wochenended that the franc is still "highly valued" and that the central bank sees "no reason" to give up the negative interest rate or "our willingness to intervene in the foreign exchange market." We expect EUR-CHF to remain broadly underpinned.

    [USD, CAD]
    USD-CAD ramped up to one-week highs of 1.2925 from North American session lows of 1.2807. The pairing participated in the greenback's broad rally today, helped higher by a near $1.50/bbl pullback in WTI crude prices. CAD traders will now look ahead to Wednesday's release of Canada March manufacturing data.

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