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By XE Market Analysis November 1, 2019 1:28 pm
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    XE Market Analysis: Asia - Nov 01, 2019

    The Dollar rallied in early N.Y. trade on Friday, supported by a better October U.S. employment report. The DXY rose to 97.45, up from overnight two-week lows of 97.17, though faded again after the October manufacturing ISM miss. The Dollar index later tested intra day lows. EUR-USD bottomed at 1.1128 after the jobs report, later topping over 1.1170. USD-JPY slid to 107.92 on the weak ISM, later recovering over 108.00 on improved risk levels. USD-CAD peaked at 1.3196, later falling under 1.3145 on higher oil prices. Cable was range bound through the session, trading inside a 1.2935 to 1.2975 band. Treasury yields pared their employment jump after ISM disappointed, though remained higher on the day. Wall Street meanwhile, rose sharply.

    [EUR, USD]
    EUR-USD bottomed at 1.1128, down from near 1.1160 in the aftermath of the better U.S. jobs report, later recovering over 1.1170 on the back of the manufacturing ISM miss. With the Fed now on hold for the foreseeable future following Wednesday's rate cut , and a new, and likely dovish leaning ECB chief now installed, along with a weak European economy, EUR-USD should be contained going forward. Resistance is seen between 1.1180 and 1.1200, with support at 1.1080.

    [USD, JPY]
    USD-JPY got a boost to 108.26 highs from opening lows of 107.92 after the jobs report, though the manufacturing ISM later in the session reversed early gains, resulting in a session low print of 107.91. The pairing eventually recovered back over 108.00 on risk-on conditions, where it steadied into the weekend. USD-JPY overall will continue to rely on the risk backdrop for directional cues, paying close attention to U.S./China trade developments as well. The three-week low of 107.88 seen overnight marks support now, with initial resistance at the 20-day moving average at 108.35.

    [GBP, USD]
    Cable posted an up week, though was choppy in N.Y. trade, peaking at 1.2970, before falling under 1.2935. Today was meant to have been the day after Brexit, but instead the UK finds itself with Brexit delayed for a second time and once again in a quagmire of political uncertainty. Sterling retains about a 8% Brexit discount in our estimate, and we don't expect any further significant unwinding in this as all options remain open with regard to how Brexit is resolved -- ranging from no deal to Brexit canceled, depending on the results of the December-12 general election and any referendum after the election.

    [USD, CHF]
    EUR-CHF was rangebound over the 1.1000 mark in N.Y trade on Friday, though remains relatively buoyant, lifted recently by the diminishing in no-deal Brexit risks, which has been supportive of the euro. The cross last week printed a two-and-a-half-month high at 1.1059 and besides Thursday, has remained over 1.1000 for over a week.

    [USD, CAD]
    USD-CAD rallied from opening lows of 1.3161 to 1.3196 in the aftermath of the better U.S. employment report. Since then, a rally in WTI crude over the $55/bbl mark saw the pairing ease back under 1.3145. The dovish tilting BoC statement on Wednesday opened the door to a rate cut, perhaps as early as December, which should limit USD-CAD downside potential going forward. In addition, the FOMC remains on hold and data such as today's U.S. jobs report should keep the Fed sidelined for some time. Resistance is now at 1.3200, with support at Thursday's 1.3135 low.

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