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By XE Market Analysis May 18, 2017 3:25 pm
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    XE Market Analysis: Asia - May 18, 2017

    The dollar had been fairly steady through the N.Y. morning session, finding its feet to a degree. After the London close, however, the greenback rallied broadly, the move apparently prompted by a circulated Comey video, which seemed to let president Trump off the hook with regards to the Russia story, saying he was never pressured to drop the Russia case. Strangely, the video in question was from May 3 testimony, and had been public at the time. Cable had the biggest reaction, falling over 100 points in seemingly "flash crash" form, touching 1.2889 while EUR-USD fell to 1.1075 lows from early afternoon highs of 1.1138. USD-PJPY topped 111.75, while USD-CAD reclaimed the 1.3600 handle.

    [EUR, USD]
    EUR-USD stayed away from overnight trend highs of 1.1171, settling in a relatively narrow range between 1.1100 and 1.1150 through the morning session. The urgency of the U.S. political maelstrom faded somewhat, giving traders a chance to book profits. With odds for a June Fed rate hike lessened this week, and The ECB expected to remove the easing bias in the forward guidance at the June policy meeting, the euro may still have upside potential.

    [USD, JPY]
    USD-JPY found its feet into the 110.50 level early in the session, and later rallied to as high as 111.75 on the Comey news. The tentative improvement in the risk backdrop has seen Wall Street post mild green numbers, while Treasury yields have edged higher today, both supportive of USD-JPY. Assuming U.S. political fallout remains contained, and the administration gets back to work on its economic package, prospects for better U.S. growth, Fed rate hikes, and ongoing BoJ stimulus should keep the yen under pressure.

    [GBP, USD]
    Cable faded from London highs over 1.3045 through the N.Y. morning session, finding support into the 1.3000 mark until after the London close. From there, the pairing dropped over 100 points in flash crash fashion, the move attributed to Comey testimony from May 3, where he said he was never pressured to close the Trump/Russia case.

    [USD, CHF]
    EUR-CHF traded through its 20-day moving average of 1.0872, bottoming at 1.0866, putting in further 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, though with EUR-USD headed lower on Thursday, the cross succumbed to selling pressure as well.

    [USD, CAD]
    USD-CAD has faded into 1.3583 lows, coming from overnight highs of 1.3697 seen in morning London dealings. The move lower comes as WTI crude regains some composure after falling toward $48.00 overnight. The potential stalling of the Trump administration's economic agenda could keep CAD gains limited going forward however, with the current political situation making it unlikely that growth items such as tax and regulatory reform are pushed through. CAD traders mat focus on positioning later in the session, as focus will shift to Canada CPI data on Friday.

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