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By XE Market Analysis October 7, 2019 1:18 pm
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    XE Market Analysis: Asia - Oct 07, 2019

    FX trade was quiet in N.Y. on Monday, with major Dollar pairings sticking to narrow ranges. There was no data to move the markets, though comments from White House adviser Kudlow helped USD sentiment when he said the U.S. is open to a short term trade deal with China. USD-JPY moved to session highs toward 17.10 after the trade talk. EUR-USD was sideways through the morning session, peaking at 1.1000, then pulling back to near 1.0980 on the trade comments. USD-CAD bottomed at its 200-day moving average at 1.3290, while Cable recovered London morning losses, peaking at 1.2333.

    [EUR, USD]
    EUR-USD traded sideways through the N.Y. morning session, ranging between 1.0982 and near two-week highs of 1.1000. The Dollar overall appears to be showing signs of peaking, with incoming U.S. data last week showing significant indications of economic slowing. Europe has its own growth issues as well of course, though with markets pricing in another Fed rate cut at the end of October, EUR-USD may have some room to run to the upside in the coming sessions.

    [USD, JPY]
    USD-JPY has been steady in the upper 106s since the London open, up from 106.64 lows seen in early Asian trade. Fed chair Powell's speech Tuesday afternoon could impact the pairing, where a less dovish slant will support. Focus will then turn to the U.S./China trade talks, beginning on Thursday in Washington. USD-JPY later topped at 107.07 following comments from White House adviser Kudlow, who said that a U.S.-China deal was possible and negotiators could make progress this week, and Washington is open to looking at China's proposals. The comments came after China over the weekend indicated it is not open to a broad scale trade agreement.

    [GBP, USD]
    Cable recovered from London morning lows of 1.2287, peaking at 1.2333 into the N.Y. open. Brexit is coming to a head, with the EU to decide by the end of the week on whether there is a deal to be made with the UK government, based on the latter's proposals. It's not looking good, and it remains difficult to see if concessions on both sides are possible with regard to the Irish border issue, and how to achieve a "clean" Brexit while at the same time maintaining the Good Friday Peace Agreement in a way that is satisfactory to both sides. If there is no agreement, then UK Prime Minster Johnson won't have a deal by the October-19 deadline set out in the newly created parliamentary bill that would require the prime minister to ask the EU for an extension in Brexit to January 31.

    [USD, CHF]
    The Swiss franc last week found itself in the rare position of being biggest loser out of the main currencies. EUR-CHF yesterday printed a two-week high at 1.0979, extending a rebound from the 27-month low seen in early September at 1.0811.The cross has since pulled back to the lower 1.0900s. Suspicions of SNB intervention abounded, which made sense from a tactical perspective, with the central bank having stood aside when then cross was downward trending amid broader euro underperformance before stepping in when EUR-USD was on the ascent. At its recent quarterly policy review, the SNB reaffirmed its long held view that the franc remains "highly valued", while highlighting fragile markets and affirming the commitment to intervene in currency markets if needed.

    [USD, CAD]
    USD-CAD eased back from overnight highs of 1.3330, bottoming at 1.3290, which coincides with the 200-day moving average, and has provided initial support. Firmed up oil prices brought the pairing off its highs, with WTI crude trading over $54.00, up from Friday's $52.05 lows. Bigger picture however, the USD-CAD remains mired inside an approximate trading band of 1.3150 to 1.3350 since early August. Barring unexpected events, more of the same appears to be in order.

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