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By XE Market Analysis November 22, 2017 3:03 pm
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    XE Market Analysis: Asia - Nov 22, 2017

    The dollar took it on the chin in N.Y. trade on Wednesday, taking the DXY to one-week lows of 93.44. Hawkish ECB speak from Coeure, who hinted at an end to QE in September next year. In addition, FX market jitters over Yellen comments on low inflation dented the dollar. EUR-USD topped at 1.1798 after opening under 1.1740. USD-JPY printed near two-month lows of 111.51, slicing through its 200-day moving average in the process. USD-CAD remained heavy as WTI crude make two-plus year highs over $58. Cable meanwhile, was dragged higher by EUR-USD, topping at 1.3300. Later, the dollar faded further, when FOMC minutes showed concerns over low inflation, with worries that some of the softness could be due to more persistent factors. Remember this uncertainty has recently been brought up by Fed Chair Yellen.

    [EUR, USD]
    EUR-USD printed 1.1797 highs, before being pushed back into the 1.1785 level. London sellers were reported into the close, with position squaring seen ahead of the FOMC minutes, and the U.S. Thanksgiving holiday on Thursday. The 50-day moving average at 1.1765 marks the next support level, with resistance at 1.1821. The pairing ran up to 1.1821 highs after the FOMC minutes, where low inflation concerns were revealed.

    [USD, JPY]
    USD-JPY fell to better than one-month lows under 111.80 early, holding above its 200-day moving average, at 111.74. The dollar overall remained pressured following Yellen's speech on Tuesday, where she voiced concerns over the low inflation environment. With regards to USD-JPY, a Reuters story indicated that perhaps a hawkish shift in BoJ thinking may be coming in the months ahead. The pairing later pushed through its 200-day moving average, with selling momentum picking up on the break. USD-JPY subsequently bottomed at 111.14, a nearly two-month low after the FOMC minutes.

    [GBP, USD]
    Cable coat-tailed EUR-USD higher while simultaneously losing ground to the euro and yen, reflecting broad dollar weakness on the one hand, and a bearish pound sentiment on the other following the notable downgrade in official UK growth projections. Cable lifted out of a 1.3212 low to a peak of 1.3320 after the FOMC minutes before capping out. An FT report today attesting that the EU and UK have a breakthrough in the works with regard to agreeing on Brexit divorcing terms has, meanwhile, been a positive.

    [USD, CHF]
    EUR-CHF pulled back under 1.1600 after having recouped from Monday's swift dive to a 1.1591 low, seen as markets reacted to the news that talks to form a coalition government in Germany had collapsed. The cross had posted a 34-month high at 1.1723 on Friday, though with political uncertainties now prevailing in Germany (where new elections may not happen until next March), we expect EUR-CHF to trend sideways, with risks tilted to the downside for now. Key support is at 1.1542-45.

    [USD, CAD]
    USD-CAD fell to seven-session lows of 1.2699 after the FOMC minutes. A broadly weaker greenback, along with two-plus year highs in WTI crude were the main drivers. The 20-day moving average at 1.2774 marks resistance now.

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