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By XE Market Analysis October 4, 2019 3:14 pm
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    XE Market Analysis: Asia - Oct 04, 2019

    The Dollar had a rough week, as softer U.S. data weighed broadly. Friday's jobs report was better than some had expected, though following a brief bounce, the DXY slipped back toward lows of the week. The market has about 100% priced in an October rate cut, which should continue to see the USD struggle going forward. EUR-USD bottomed at 1.0957 after the jobs data, later topping at 1.0987. USD-JPY topped at 107.13 before settling in near 206.80, while USD-CAD bucked the trend a bit, rallying to 1.3334 from opening lows at 1.3298. Cable bottomed at 1.2276 early, then made its way to highs over 1.2340. Next week's U.S. data calendar is highlighted with PPI and CPI, while Thursday and Friday, trade talks between the U.S. and China resume in Washington.

    [EUR, USD]
    EUR-USD hit 28-month lows of 1.0879 on Tuesday of this week, and has rallied through the remainder of the week, topping at 1.0999 on Thursday, and 1.0997 today. Softer U.S. data was a major drive of Dollar weakness, with the manufacturing and services ISM doing the most damage, while today's employment report was less than stellar, though better than some had expected. This said, another Fed rate cut is likely at the end of the month, which will put a floor under EUR-USD. Europe has its own issues of course, with recession looking more likely, and the ECB in perma-ease mode.

    [USD, JPY]
    USD-CAD revealed little reaction to the 8:30 EDT round of data, where trade on both sides of the border was in-line with expectations, and the U.S. jobs report was better than some had feared. The pairing opened at session lows of 1.3298, since making its way to 1.3334 highs. WTI crude has pulled back from earlier highs, likely weighing some on the CAD. Since closing over the 200-day moving average on Wednesday for the first time in a month, USD-CAD has been supported by the level, currently at 1.3293.

    [GBP, USD]
    Cable fell to 1.2376 in N.Y. morning trade, after correcting from yesterday's peak at 1.2413. The pairing later bounced over 1.2340 into the London close. The UK government conceded that the UK would ask for an extension in Brexit in the event no deal has been reached with the EU by October, as mandated by the recently established law. There is just one week left for the UK and EU to come up with a compromise if a deal is to be reached, which is looking unlikely with neither side likely to shift sufficiently on the Irish border issue. A delay in Brexit to January 31 and a general election in November or December remains the most likely scenario from here.

    [USD, CHF]
    EUR-CHF eased back to 1.0909 in N.Y. on Friday, after putting in 4 higher daily highs this week, and peaking at 1.0979 on Friday. Suspicions of SNB intervention were raised through the week, which makes sense from a tactical perspective, to stand aside when then cross was downward trending amid broader euro underperformance and then to step in when EUR-USD is on the ascent.

    [USD, CAD]
    USD-CAD rallied to one-month highs of 1.3347 early in the session, as WTI crude traded to near two-month lows just above $51/bbl. The weaker U.S. services ISM turned things around for the pairing, as the data resulted in a broad USD sell-off. Later, the improvement in risk taking levels following Wall Street's recovery from sharp post-data losses, allowed oil prices to recover over $52, which put further pressure on USD-CAD, seeing a 1.3310 low. The pairing closed above its 200-day moving average at 1.3294 on Wednesday for the first time in a month, and now becomes a decent support level.

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