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By XE Market Analysis November 4, 2019 3:02 pm
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    XE Market Analysis: Asia - Nov 04, 2019

    The Dollar was mostly higher in N.Y. trade on Monday, leaving the DXY up at 97.47 highs from pre-opening lows at 97.25. Slightly lower than expected U.S. factory orders had little impact. The Greenback maintained its bid tone, with fallout from last week's stronger jobs report, and an FOMC that is solidly on hold going forward putting a floor under the USD. Wall Street headed to fresh record highs, while Treasury yields rose as well, also supportive of the Dollar. USD-JPY rallied to 108.62 highs from early lows of 108.37, while EUR-USD dipped under 1.1135 from 1.1170. USD-CAD dipped under 1.3140 on firmed oil prices, while Cable fell under 1.2885.

    [EUR, USD]
    EUR-USD faded from pre-open highs of 1.1170 to 1.1135 lows after the London close, though remains inside of ranges seen over the past couple of sessions. Fallout from the FOMC, which indicated last week it is now on policy hold for the foreseeable future, has overall been a USD-positive sign. At the same time, the ECB remains in full-on easing mode going forward. A positive for the Euro was news that the U.S. my forgo tariffs on European autos, while European PMIs improved, though remain in contractionary territory. When combined, all these factors point to range trade for the time being, until a fresh directional catalyst emerges.

    [USD, JPY]
    USD-JPY was steady through the Asian session, as Japan was on holiday, severely curtailing activity. The pairing traded sideways near 108.20. In morning European trade, news that good progress is being made on the U.S./China trade front lifted equity markets, allowing USD-JPY to rally to 108.62. Wall Street opened in record territory, which continued to support the risk-sensitive Dollar-Yen through the session. The 109.00 mark remains solid resistance.

    [GBP, USD]
    Cable ended at lower levels on the day after posting the fourth week out of the last five where a higher high was made. The UK now finds itself with Brexit delayed for a second time and once again in a quagmire of political uncertainty, and we don't expect any further significant unwinding in sterling's Brexit discount as all options remain open with regard to how Brexit is resolved -- ranging from no deal to Brexit cancelled, depending on the results of the December-12 general election and any referendum after the election. PM Johnson's Tory party is presently indicated by Politico's poll tracker to have support of 38%, which is 1 point up on last week and 3 points up from two weeks ago. At the moment, support is sufficient for the Tories to win with a majority in the House of Commons. Cable slipped under 1.2885 into the close, down from 1.2925 at the open.

    [USD, CHF]
    EUR-CHF slipped under the 1.1000 mark in N.Y. on Monday, down from early highs of 1.1035. A softer EUR-USD weighed. The pairing remains relatively buoyant, lifted recently by the diminishing in no-deal Brexit risks, which has been generally supportive of the euro. The cross last week printed a two-and-a-half-month high at 1.1059 and besides Thursday and Monday, has remained over 1.1000 for over a week.

    [USD, CAD]
    USD-CAD bottomed at four-session lows of 1.3128 in early Asian trade overnight, taking its cue from risk-on conditions. Firmer Treasury yields during the North American session provided some support, with the pairing topping at 1.3158 after the the open. WTI crude prices moved up to better than one-month highs over $57.20, which capped upside, and has since seen USD-CAD drift back to lows under 1.3140. Bigger picture, the dovish tilting BoC statement seen last Wednesday opened the door to a rate cut, perhaps as early as December, which should limit USD-CAD downside potential going forward.

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