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By XE Market Analysis May 17, 2018 3:07 pm
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    XE Market Analysis: Asia - May 17, 2018

    FX trade was relatively quiet in N.Y. on Thursday, keeping the DXY inside a 93.38 to 93.56 trading range, and the major dollar pairings range bound. EUR-USD ranged between 1.1785 and 1.1812, while USD-JPY topped at new trend highs of 110.86 before slipping back to 110.63 lows. Cable was sideways on either side of 1.3500, while USD-CAD rose to 1.2822 highs as oil prices pulled back from multi-year highs.

    [EUR, USD]
    EUR-USD managed to hold above Wednesday's trend low of 1.1762, basing today at 1.1777 into the N.Y. open. Italy political concerns continue to keep the euro under pressure, keeping Bund yields down on safe-haven flows, while firm Treasury yields remain supportive of the dollar.

    [USD, JPY]
    USD-JPY printed near four-month highs of 110.86 before pulling back some, with profit taking setting in as Wall Street gives back earlier gains. We look for further upside potential, as markets price in a faster pace of Fed rate hikes, and as Japan's BoJ remains in perma-ease mode. Support now comes in at 110.20, which represents the 200-day moving average.

    [GBP, USD]
    Cable steadied on either side of 1.3500 in N.Y., holding net lower on the day after reversing out of intra day gains above 1.3560 after the UK government dismissed a report that it was of a mind for Britain to remain in the EU customs union to avoid a hard Irish border scenario. Cable resistance is at 1.3650, the 200-day moving average.

    [USD, CHF]
    EUR-CHF logged a five-week low yesterday at 1.1767 in synchrony with EUR-USD's swan dive to a five-month low at 1.1763, with both the cross and the pairing subsequently rebounding some. EUR-CHF lifted to 1.1830. Declines so far this week are marking the biggest intra-week decline since early January, interrupting a bull trend that's been in development since mid last year. Given that EUR-CHF is a good proxy of the Swiss franc's trade weighted value, and given Swiss policymakers view of the currency has still being overvalued, the latest price action won't been pleasing to the SNB, which can be expected to remain fully committed to its prevailing NIR policy.

    [USD, CAD]
    USD-CAD rose to 1.2822 highs from 1.2750 overnight lows, as WTI crude pulled back from multi-year highs of $72.30, trading toward $71.00. The CAD may remain under some pressure in the coming weeks, as NAFTA negotiations remain stalled. The U.S. Speaker of the House has said an agreement needs to be made by today, to provide enough time for the House to vote on the measures during this session, though the three countries are still far apart on some major trade issues.

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