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By XE Market Analysis May 17, 2017 2:22 pm
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    XE Market Analysis: Asia - May 17, 2017

    The dollar took it on the chin in N.Y. trade on Wednesday, with U.S. political concerns keeping risk taking levels well-contained. Gold soared, yields fell, and Wall Street was hit hard following reports that Trump asked then FBI chief Comey to call off the investigation into former NSA head Flynn and his Russian dealings. The DXY fell to 6-month lows of 97.53, led by a six-month EUR-USD top of 1.1154. Risk sensitive USD-JPY fell to 111.02, a three-week low from opening highs near 112.50. USD-CAD remained relatively firm despite higher oil prices and decent Canada data, holding over 1.3600 through most of the session. Cable printed new 7-plus month highs of 1.2991, though turned lower after the London close.

    [EUR, USD]
    EUR-USD has peaked at 1.1150, a new six-month top, as the dollar overall suffers from the current round of U.S. political upheaval. The greenback has been shunned broadly this morning, taking the DXY to 97.56 lows, levels last seen on November 8 following the U.S. presidential election. Recently more upbeat EU data has helped the euro's cause as well, and the market may begin looking at the November high of 1.1299 as the next upside target.

    [USD, JPY]
    USD-JPY crashed though its 20-day moving average of 112.11 early in the session, and later breached its 50-day moving average of 111.65, bottoming at 111.02, levels last seen on May 1. The move lower was driven by broad risk-off conditions, which saw equities sell off, Treasuries rise, and gold rally sharply. The risk-sensitive yen was the biggest winner of the session.

    [GBP, USD]
    Cable printed a new 7-month peak of 1.2991 in N.Y. trade, before falling back under 1.2940 on profit taking. Near-term dollar prospects look to be up in the air, as the latest political turmoil in the U.S. plays out. Cable resistance is expected at 1.3000, where good option related selling interest is reported. Support is at 1.2905.

    [USD, CHF]
    EUR-CHF has drifted to the lower 1.09s, putting in a little distance from the eight-month high that was seen last week at 1.0978. The cross remains well up on the sub-1.07 levels that were prevailing in April before the French presidential elections, which reflects an unwinding in franc safe-haven premium (of which there is still some despite a punishing -0.75% deposit rate).

    [USD, CAD]
    USD-CAD held up quite well, mostly over 1.3600, despite decent Canada manufacturing data, a broadly lower greenback, and relatively firm oil prices. The pairing has remained above Tuesday's near three-week low of 1.3576, and given the Canadian economy's reliance on U.S. trade, ongoing political issues in the U.S. could lead to a stalling of Trump's economic agenda. For this reason, the CAD may remain on a softer footing for now.

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