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By XE Market Analysis November 18, 2015 3:15 pm
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    XE Market Analysis: Asia - Nov 18, 2015

    The dollar was on a firmer footing through the N.Y. morning session on Wednesday, though remained inside of recent trading bands. Anticipation of the FOMC mintes likely kept conditions steady, though on their release, the dollar initially rallied, then quickly fell back, as the minutes didn't really clear up whether or not December rate lift off will occur. The minutes said most members expected conditions for liftoff could be met in December, with others saying available data by December would not warrant a rate hike. EUR-USD fell to new 7-month lows of 1.0618, before rallying to 1.0632 highs. USD-JPY meanwhile, shot to 123.76 from 123.50, before falling back under 123.50. USD-CAD tested Wednesday's trend high of 133.70 before falling back under 1.3350. WTI crude vriefly traded under $40, before rallying to $40.0 into the close. .

    [EUR, USD]
    After steady price action through the morning, EUR-USD took a step lower ahead of the London close, posting a 1.0635 base, from earlier 1.0674 highs. Yesterday's seven-month low of 1.0631 was the first target area, though a break under 1.0625, the April 16 low, opens the door for a test under 1.0600 to the 1.0570 region. The 2015 low of 1.0463 isn't that far out of reach. Selling pressure was likely related to pre-positioning ahead of the FOMC minutes. The euro fell to 1.0618 lows after the minutes, though the mixed signals saw it rebound quickly over 1.0670.

    [USD, JPY]
    USD-JPY posted new eight session highs of 123.60 ahead of the FOMC minutes, matching the two-month peak posted on November 9. Today marked the third straight day of higher daily highs, interesting ahead of tonight's BoJ meeting. While further easing measures are not expected, Kuroda's tone may turn decidedly more dovish as compared to the last meeting, where board members moved the time frame further ahead for reaching the inflation target but did not provide more dovish verbiage. USD-JPY's move this week may well be in expectation of a shift. In addition, a December Fed rate hike appears to be a better bet. As a result, divergent policy paths should continue to support USD-JPY. The pairing popped to 123.76 following the minutes, before dipping to 123.35, and rallying back to 123.60 into the close.

    [GBP, USD]
    Sterling was near net unchanged against the dollar, while showing a fractional loss against the euro. The pound gaven back most of the gains seen after BoE's Broadbent prompted markets to re-consider what he appeared to imply were overly dovish interpretations of the BoE's November Inflation Report. Cable traded to 1.5189 lows ahead of the FOMC minutes, and whipsawed between 1.5243 and 1.5202 following their release. We continue to expect the pound to hold its own against the greenback, or at least outperform the euro in the scenario of further broad dollar gains into next month's FOMC.

    [USD, CHF]
    EUR-CHF continues to oscillate around 1.08, climbing to a two-week peak of 1.0863 in the aftermath of the FOMC minutes. The cross failed to sustain losses below the 100-day moving average at 1.0778. We expect the bias to remain to the downside, however, given the ECB's policy path. ECB-engineered euro losses will be a tide that the SNB will find hard to stop, although the cross still remains comfortably above the sub-1.05 levels that were seen earlier in the year, before the SNB cut the deposit rate to -0.75%.

    [USD, CAD]
    USD-CAD rallied to a point or two above Tuesday's 1.3344 high, with early domestic buying noted. The pairing had found support into the 1.3300 level through the overnight session, and with WTI crude prices falling back under $41 in the pre-open, the only direction for USD-CAD was up. Monday's 1.3370 one-plus month peak will provide initial resistance, with the 1.3400 level seen after that. Talk of barrier option defense of 1.3400 strikes made the rounds. The pairing touched 1.3369 highs after the FOMC minutes, though pulled back under 1.3340 as oil prices recovered.

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