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By XE Market Analysis November 25, 2019 2:32 pm
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    XE Market Analysis: Asia - Nov 25, 2019

    The Dollar was firmer overall in N.Y. trade on Monday, leaving the DXY at eight session highs of 98.36 into the close. The only data release of note was a softer Dallas Fed index, but it had little impact on markets. The Dollar, and Wall Street were supported by news that China would begin cracking down on intellectual property infringements, taken as a positive sign on the trade front. Treasury yields were a little lower. EUR-USD printed near two-week lows of 1.1003, down from 1.1025 highs seen at mid-morning. USD-JPY perked up to 108.97 from 108.83 as risk-on conditions prevailed. USD-CAD rallied from 1.3296 to 1.3319, taking its cue from softer oil prices. The Greenback will continue to take its cue from the risk backdrop, along with trade developments, though FX liquidity will likely begin to dry up ahead of the Thanksgiving holiday on Thursday, potentially leading to choppy conditions.

    [EUR, USD]
    EUR-USD dipped to eight-session lows of 1.1004 in early N.Y. trade, down from London morning highs of 1.1032. The pairing subsequently bounced to 1.1025, though unable to test its 50-day moving average, currently at 1.1042. The pairing has looked heavy since Friday, when the combination of stronger U.S. PMIs and weaker European PMIs weighed on the Euro. From here, the November 14 low of 1.0989 will be in the cross hairs, and a break there brings the 1.0940 area into view.

    [USD, JPY]
    USD-JPY printed one-week highs of 108.97 during the N.Y. session, creeping just over the 200-day moving average at 108.94. The risk-sensitive pairing headed up from overnight Asian lows of 108.63 following news that China would crack down on intellectual property theft, taken by the market as an olive branch on the trade front. Sellers are expected into the psych 109.00 level, with buy-stops seen from 109.10.

    [GBP, USD]
    Cable was firmer in N.Y. trade, peaking at 1.2912 from 1.2867 into the open. The latest opinion polls show PM Johnson's Conservative party lead to have extended slightly, with Politico's poll tracker showing 43% support for the Tories, up a point from Friday, and Labour's support down a point, at 29%. This comes with the main parties having now released their election manifestos. The Conservatives need to win an outright majority to push the withdrawal deal with the EU through, and implement Brexit in January, at which point the UK would enter a transition period that will last until the end of 2020, during which time not a lot would change in practical terms. Friday's flash November U.K. PMI survey data showed the UK economy to be headed for negative GDP in Q4, which should limit Sterling gains going forward.

    [USD, CHF]
    EUR-CHF broke its string of six consecutive days of gains on Monday, pulling back from the two-week highs of 1.1010 highs seen on Friday. A generally weaker Euro was the driver of the modest losses. The cross had 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 caught a small bid overnight, rallying to 1.3319 from lows of 1.3285 seen in London morning trade. The move up came as WTI crude prices fell nearly $1/bbl, though with oil recovering again on renewed trade hopes, USD-CAD has eased back under the 1.33 mark. Last week, comments from BoC chief Poloz, threw cold water on rate cut expectations, saying "We think we've got monetary conditions about right." That was followed by better Canada retail sales on Friday, which should continue to erode cut expectations. As a result, USD-CAD should remain in sell-the-rally mode for the time being.

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