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By XE Market Analysis October 17, 2017 3:05 pm
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    XE Market Analysis: Asia - Oct 17, 2017

    The dollar started the N.Y. session on a firmer footing, aided by higher than expected import and export prices. From there however, the greenback turned lower, leaving the DXY under 93.50 from one-week highs of 93.73. EUR-USD bottomed at 1.1737 before making its way to 1.1774 highs, as range trade mentality persists. USD-JPY managed to hold the 112.00 handle through the day, though pulled back from 112.47 to a low of 112.14. Cable touched four-session lows of 1.3155 on Brexit concerns, while USD-CAD traded to 1.2591 after it was learned that Canada would not accept U.S. proposed changes to NAFTA.

    [EUR, USD]
    EUR-USD reversed out of one-week lows of 1.1737, topping at 1.1774 N.Y. highs. Political uncertainties in Europe have been a bit of a drag on the euro of late, with Spain/Catalonia issues, German elections, and Austrian elections all giving pause to euro bulls. In addition, uncertainty over the speed of ECB stimulus removal has kept a cap on EUR-USD. For the dollar, a December Fed rate hike has largely been priced in, keeping euro downside limited going forward. As a result, consolidation between 1.1700 and 1.1900 looks to be the bet.

    [USD, JPY]
    USD-JPY has remained near the top of its intra day range, peaking at 112.47, and continuing to flirt with the 20-day moving average of 112.42. Buyers stepped in overnight, as Asian equity markets rallied, though with Wall Street on a mixed footing today, despite the DJIA crossing 23k for the first time, upside USD-JPY momentum appears to have stalled for now. The 200-day moving average at 111.78 provides the next support level.

    [GBP, USD]
    Cable logged a four-session low at 1.3155 in N.Y. BoE-speak during parliamentary testimony showed policymakers expecting inflation to scale back after peaking over the next month or two, while the OECD trimmed its UK growth forecasts and said that Brexit, especially a hard Breixt, would "hurt trading relationships and reduce logn-term growth." BoE chief Carney warned that the businesses are losing confidence that Brexit will proceed smoothly. We remains Cable bears, seeing scope for a new sub-1.3000 range developing in the weeks ahead.

    [USD, CHF]
    EUR-CHF has settled back around the 1.1500 level after last week capping out a near two-week rally phase at 1.1566, which was the loftiest level seen since September 25. Former EUR-CHF resistance at 1.1488-90 has been acting as a support. We have been anticipating an eventual return to 1.2000, which is the former trading floor of the SNB's, though this assumes that political tensions (Catalonia in particular) don't worsen, as the franc tends to find demand in the face of news developments that are threating to the political integrity of the Eurozone.

    [USD, CAD]
    USD-CAD lurched higher following CNBC reports indicating that both Canada and Mexico would reject U.S. proposals on changes to NAFTA, muddying the trade picture between Canada and its largest trading partner, the U.S. The pairing has topped at 1.2591, up from near 1.2550 ahead of the news. The pairing later eased back into 1.2535 lows. Resistance comes in at 1.2600, the October 6 high, with support at 1.2450.

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