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By XE Market Analysis November 26, 2018 3:05 pm
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    XE Market Analysis: Asia - Nov 26, 2018

    The Dollar started the N.Y. session on a softer footing, though spent the morning session moving higher, taking the DXY to seven-session highs of 97.07, and up from 96.71 early on. There was little data to drive the market, though the Dallas Fed index fell more than expected. EUR-USD bottomed at 1.1326, down from 1.1375, while USD-JPY advanced on the back of a solid Wall Street rally, and firmer yields. USD-CAD peaked at 1.3248, on general USD strength and as oil prices eased from highs. Cable dipped to 1.2905 on uncertainty over the passage of the Brexit deal in the House of Commons.

    [EUR, USD]
    EUR-USD drifted lower through the N.Y. morning session, bottoming at 1.1326, just above Friday's low, and coming from earlier highs of 1.1375. Comments from ECB chief Draghi appeared to weigh on the pairing, as he said incoming EU data has been weaker than expected (today's weaker German Ifo a case in point), and that significant monetary policy stimulus is still needed.

    [USD, JPY]
    USD-JPY is on seven-session highs of 113.60, up from near 113.15 into the N.Y. open. The greatly improved risk backdrop has supported the pairing since the open, as Wall Street rallies, oil prices turn higher, and as Treasury yields move up. The November 16 high of 113.66 is the next upside target, with the 114.00 level seen targeted on a move above there.

    [GBP, USD]
    Cable remained buoyant on the back of general weakness in the dollar and yen into the N.Y. open, though later pulled back to 1.2805 lows from over 1.2860. The pound has traded neutrally in the wake of the EU-27's approval a Brexit deal with the UK on Sunday. It still looks highly uncertain whether the "worst of both worlds" deal will be passed in the UK's parliament, however, and markets continue to factor in a risk of there being a lose-lose no-deal Brexit scenario. The UK parliament will likely vote on the deal on December 12. Should it be voted down, the government will have not choice but to return the issue to the people with either a general election or, more likely, another referendum, which would likely ask where to have a "hard" Brexit or remain in the EU.

    [USD, CHF]
    EUR-CHF has recouped to the lower 1.1300s steadied after dropping sharply to a two-month low at 1.1297 last week. A renewed spike in Italian yields amid ongoing wrangling between Roma and Brussels about Italy's budget had weighed on the common currency, reviving the Franc as a safe-haven currency. There has also been flagging economic growth momentum in the Eurozone. EUR-USD has support at 1.1300-05.

    [USD, CAD]
    USD-CAD was weighed down modestly overnight, as oil prices were lifted from Friday's 13-month lows. The pairing has since rallied to 1.3248 highs after touching 1.3188 lows in London morning trade. The CAD received some support from Friday's Canada CPI and retail sales data, though oil remains a major driver of the currency. Key for oil prices will be the G-20 meeting in Argentina, where Russia's Putin and Saudi Arabia's crown prince will attend, and will likely discuss oil prices and production levels. The G-20 will be followed by the official OPEC meeting in Vienna on December 6.

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