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By XE Market Analysis November 22, 2019 2:57 pm
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    XE Market Analysis: Asia - Nov 22, 2019

    The Dollar ended the week at a six-session high, taking the DXY to 98.24 highs from early lows of 97.99. Incoming U.S. data were the drivers, leaving flash manufacturing and services ISMs at better than expected levels, and seeing the final November University of Michigan consumer sentiment rise to higher than consensus forecasts. Wall Street managed modest gains, while Treasury yields firmed up some, supportive of the USD. Trump said the U.S. was close to a trade deal with China, though the market has heard enough of this ongoing mantra, with no results, and showed little reaction to the comment. EUR-USD topped at 1.1061 in early trade, making its way to 1.1024 lows into the close. USD-JPY topped at 108.73, up from 108.48, while USD-CAD fell to 1.3255 on better Canada retail sales, later rallying to near 1.3300 on weaker oil prices. Cable faded from 1.2880 to 1.2823 lows.

    [EUR, USD]
    EUR-USD fell to six-session lows of 1.1024 after the London close, coming from 1.1061 at the open. Better U.S. data, including the flash manufacturing and services PMIs were the main drive of Dollar strength, contrasting the soft European PMIs seen ahead of the open. The pairing initially found support into the 50-day moving average at 1.1042, though an eventual break of the level prompted another round of selling to the lows. We look for further losses in the coming weeks, as the U.S. economy remains strong relative to Europe, and as the USD interest rate differential remains supportive of the Greenback.

    [USD, JPY]
    USD-JPY rose from pre-open lows of 108.48, topping at 108.73 in morning N.Y. trade, just over the London morning high of 108.70. The last push to the highs coincided with a better set of U.S. PMIs, and a Fox Business report saying Trump had told them, "we are getting close to a trade deal". A few weeks ago, that statement would have likely had considerable upside impact on the risk-sensitive USD-JPY, though markets have tired of the "almost-there" trade rhetoric, and are reminded of "The Boy Who Cried Wolf". As a result, positive trade talk will have less and less impact on the Yen, at least until it becomes clear there is actual progress being made.

    [GBP, USD]
    The Pound fell to fresh lows against the Dollar and Euro, extending the decline seen after the dismal November flash UK PMI. Cable printed an eight-session low at 1.2823 later in N.Y. dealings. The first ever release of flash PMI data for the UK from Markit showed the composite reading falling to a 40-month low of 48.6 in November, down from the final October reading of 50.0. Among the details, workforce numbers fell by the most in over seven years. The survey pointed to prolonged uncertainty about Brexit, and also political uncertainty ahead of the December general election. On the UK political front, there is now just under four weeks to go until the general election. The Conservative party has maintained a commanding lead in opinion polls, and PM Johnson will be assured that there has been little sign of a surge in support to the Labour Party as there had been in the election in 2017.

    [USD, CHF]
    EUR-CHF was up for a sixth consecutive day, printing two-week high at 1.1010. This puts in a little more space from the six-week low seen last Thursday at 1.0863. The cross has been lifted by Brexit news, with opinion polls showing a growing lead for PM Johnson's Conservative party. The two-and-a-half-year low seen in early September at 1.0811 has now swung back out of scope, for now.

    [USD, CAD]
    USD-CAD continued its recent slide following better than expected Canada retail sales. The pairing dropped to four-session lows of 1.3255 from over 1.3280. On Thursday, comments from BoC chief Poloz, who threw cold water on rate cut expectations, saying "We think we've got monetary conditions about right." Today's retail sales outcome should continue to erode cut expectations, though USD-CAD short covering into the London close, driven by an end-of-week drop in WTI crude oil prices, took the pairing to highs of 1.3298 in afternoon trade.

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