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By XE Market Analysis October 17, 2019 3:05 pm
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    XE Market Analysis: Asia - Oct 17, 2019

    The Dollar traded lower again in N.Y. on Thursday, weighed down by data misses for housing starts, industrial production and the Philly Fed index. Ahead of the open, the Euro and Pound were lifted by a surprising Brexit agreement, though without U.K. parliamentary approval, which remains uncertain, it will be back to the drawing board. EUR-USD topped at 1.1140, later steadying near 1.1125 through much of the session. USD-JPY pulled back from the 109 region, bottoming at 108.47 at midday. USD-CAD fell to 1.3131 lows on better Canada manufacturing data, and firmer oil prices, while Cable recovered from 1.2757 lows to the mid-1.2800s, after printing five-month highs of 1.2990 in London morning trade.

    [EUR, USD]
    EUR-USD printed near two-month highs of 1.1140 into the N.Y. open, later fading to 1.1102 lows, before heading back near highs. Prospects for a Brexit deal supported the Euro overnight, while more softer U.S. data were enough to see the pairing hold its gains. Brexit remain somewhat in flux, and will come down to a U.K. parliamentary vote on Saturday. It is far from guaranteed the measures will be passed. Another failure will most likely see the EUR (and Pound) pull back.

    [USD, JPY]
    USD-JPY failed to trade the 109 handle for the third day running, with profit taking ensuing through the morning session. The pairing eased back to 108.47 lows from 108.94 high, a level last seen on August 1, though with risk-on conditions remaining in place, downside progress has been contained. Talk of Japanese exporter offers from 109.00 continues to be heard, while the 200-day moving average at 109.06 has been a solid resistance marker.

    [GBP, USD]
    Cable settled in the mid-1.2800s in choppy trading, above the correction low at 1.2757. The pair earlier printed a five-month high at 1.2990. The Brexit deal now faces the considerable hurdle of a UK parliamentary vote on Saturday, with the opposition lining up against it or, in the case of Labour, demanding that the deal be subject to a confirmatory referendum. If the deal is voted down, there are lingering fears that the government will still try to force a no-deal Brexit, though we think this unlikely -- especially with the government (which, remember, no longer has a working majority), having earlier lost a parliamentary vote on the procedure for the Saturday sitting, which closes a legal loophole that Johnson could have used to pull the UK out of the EU on October 31 without a deal.

    [USD, CHF]
    EUR-CHF pulled back from the two-plus month high of 1.1059 seen after the Brexit agreement, later basing at 1.0975. The agreement will need to be agreed to by the U.K. parliament, which may be a tough one for PM Johnson to pull off. As a result, the deal remains at risk, and the safe-haven CHF reacted by heading higher.

    [USD, CAD]
    USD-CAD was on the decline since the North American open, dropping to 1.3131 from over 1.3180, the lowest level seen since July 31. Selling picked up some pace following the stronger Canada manufacturing shipments and orders data, while gains in WTI crude have supported the Loonie as well this morning. Bigger picture, the USD has lost some shine over the past two-weeks, taking the DXY to near two-month lows, as slowing growth, and prospects for an October Fed rate cut weigh. This has allowed the CAD, among other currencies to rally. USD-CAD support is now seen at 1.3105, the July 31 bottom.

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