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By XE Market Analysis October 19, 2017 2:38 pm
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    XE Market Analysis: Asia - Oct 19, 2017

    The dollar faded in early N.Y. trade on Thursday, despite slower than expected jobless claims and a better than forecast Philly Fed index. Risk-off conditions prevailed, which soured USD sentiment to a degree. Trading ranges overall were relatively narrow however. EUR-USD based at 1.1828 early on, before topping at 1.1858 in late morning trade. USD-JPY meanwhile, bounced around inside of 112.30 to 112.63. USD-CAD made some upside progress late in the session, with short covering ahead of key Canadian CPI and retail sales data on Friday. Cable attempted to move higher, though sellers re-emerged over 1.3200.

    [EUR, USD]
    EUR-USD plied a narrow 1.1828-58 range through the session. Focus remains on Spain/Catalonia, with expectations that Madrid will play its constitutional card, and remove autonomy for the Catalan region. On the central bank front, the ECB policy meeting next week may clear up policy intentions to a degree, though the bank does not appear to be in a hurry to start closing the stimulus spigots. The Fed meanwhile, is expected to raise rates again in December, though we suspect this has largely been priced into EUR-USD.

    [USD, JPY]
    USD-JPY recovered to 112.63 highs after bottoming at 112.30 earlier in the session. The modest recovery came as Wall Street pared some of its losses. The overnight drop in USD-JPY reflected in part a bout of demand for the yen as European stock markets turned south, despite the fresh record highs on Wall Street yesterday. A buy-the-dip strategy appears to be still in lay, with the pairing posting three consecutive sessions of higher daily highs and lows.

    [GBP, USD]
    Cable dipped under its 50-day moving average of 1.3158, bottoming at 1.3134 in London morning trade. The odds for a hard Brexit appear to be increasing, with the EU considering not discussing trade issues in upcoming negotiations. The picture remains bleak for the pound, and wee see further erosion in the coming weeks.

    [USD, CHF]
    EUR-CHF lifted to a one-month high of 1.1585. Former EUR-CHF resistance at 1.1488-90 proved a good support earlier in the week. 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 amid news developments that might be threating to the political integrity of the Eurozone.

    [USD, CAD]
    USD-CAD was quiet through the North American session, ranging between 1.2456 and 1.2489. It appears the market is looking ahead to key Canadian CPI and retail sales data due on Friday, which may somewhat alter expectations for next week's BoC policy meeting. The 50-day moving average at 1.2441 is the next support level.

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