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By XE Market Analysis November 5, 2019 3:03 pm
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    XE Market Analysis: Asia - Nov 05, 2019

    The Dollar traded higher in N.Y. on Tuesday, helped by a narrowed trade deficit,a better services ISM and sharply higher Treasury yields. The DXY rallied to one-week highs of 98.00, up from 97.65 at the open. EUR-USD fell to three-week lows of 1.1064 from London highs of 1.1140, as USD-JPY topped at a on-week top of 109.23. USD-CAD rallied from 1.3115 to 1.3178 highs. Cable meanwhile, faded to 1.2860 lows. Looking ahead, with the U.S. economy outperforming other major countries, the USD can be expected to hold its own going forward, especially with the Fed now seen on hold for the foreseeable future.

    [EUR, USD]
    EUR-USD fell to three-week lows of 1.1064 in N.Y. trade, down from 1.1140 into the open. A weak European economy as compared to a seemingly improving U.S.outlook was a driver today, with the Dollar ultimately helped by the strong ISM services data today, and Friday's street beating employment report. In the bigger picture, and despite recent gains, we still class EUR-USD as being amid a bear trend that's been unfolding since early 2018, from levels around 1.2500.

    [USD, JPY]
    USD-JPY traded to one-week highs of 109.23, up from early 108.81 lows. Generally risk-on conditions supported, as global stocks and yields rose. The 200-day moving average at 109.02 was breached in the process. The pairing has not closed above its 200-day moving average since April 29, and will be a bullish signal if it does manage to hold gains today. The October 30 high of 109.28 is the next resistance level.

    [GBP, USD]
    Cable lost altitude through the N.Y. session, largely following EUR-USD lower. GBP-USD touched 1.2917 on a rebound from a 1.2876, later falling back to 1.2860, a one-week low. An above-forecast October services PMI out of the UK came as something of a relief given the recent slowing in the in the UK economy. As for the Cable, last week was the fourth week out of the last five where a higher high was set. From month-ago levels, the pound is the strongest performer out of the main currencies, up by over 4.5% against the dollar and by over 6% versus the yen, reflecting an unwinding in the pound's Brexit discount. The focus now is on the December-12 general election. The Conservative Party is out in front in opinion polling, with 38% support versus just 26% for Labour, which is in second position. This would be enough for PM Johnson's party to win a majority in the House of Commons.

    [USD, CHF]
    EUR-CHF slipped to two-week lows of 1.0973 in N.Y., dragged lower by a generally under performing Euro. The pairing remains relatively buoyant overall, 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 the early part of this week, has largely remained over 1.1000 for over a week.

    [USD, CAD]
    USD-CAD rallied through the North American session, topping at 1.3178, up from early lows near 1.3125. The Canada trade report revealed a slightly wider deficit, though the 1.3% decline in exports was the likely driver behind CAD losses this morning. The data will reinforce the potential for a BoC rate cut in December. The BoC said last week that Canada has not been immune to the developments globally that have been characterized by "ongoing trade conflicts and uncertainty...restraining business investment, trade and global growth." Despite firmer oil prices, and general risk on conditions, USD-CAD may have further upside room to run.

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